EUR/USDThe pair failed to consolidate above 1.3000 overnight and trended lower as market participants questioned the latest plan by lawmakers to preserve stability in the bloc. The main issue that is of concern is the debt buyback, which according to some analysts should be around EUR 0.35 on the euro to achieve a reasonable level of debt relief. Domestic accounts will likely be encouraged to accept lower price, whilst international investors would be offered a more attractive rate. Shorter- dated implied vols remain better bid given the uncertainty surrounding the debt buyback. In terms of technical levels, supports are seen at 1.2917 which is the 55DMA and then at the 10DMA line at 1.2825. On the other hand, resistance levels are seen at 1.3023/75 and then at 1.3100.
GBP/USDThe pair recovered from losses made earlier in the session to settle higher after the GDP report came inline with expected median estimate, while safe-haven related flows stemming from the uncertainty surrounding the latest Greek proposal also supported Sterling related flows. Weakness in the morning was a product of not only risk averse trade flows relating to the uncertainty surrounding the proposed Greek debt buyback, but also cautious comments from PIMCO's Amey, who said that there is a good chance UK will lose AAA rating. In terms of technical levels, supports are seen at the 10DMA line at 1.5942, followed by the 200DMA line at 1.5858. On the other hand, resistance levels are seen at the 55DMA line at 1.6063 and then at the 21DMA upper Bollinger level at 1.6138.
The pair settled higher following comments from Japan's opposition LDP leader Abe, who once again reiterated the BoJ must pursue bold monetary easing adding that the government and BoJ can discuss a new inflation target. Abe said BoJ must set 2% inflation target, its current goal of 1% is not enough. In terms of technical levels, supports are seen at 81.65/45 and then at 81.00. On the other hand, resistance levels are seen at 82.63/84 and then at 83.00.