The euro-zone still hopes that Greece's budget cuts will make a bailout unnecessary

Good morning from beautiful Hamburg and welcome to Varengold Bank’s Daily FX Report. A U.K. survey stokes fears that the upcoming election may end in a minority government and strained the GBP. However, we wish you a nice and prosperous trading day.

Market Review – Fundamental Perspective

The GBP declined versus all of its 16 most traded counterparts and dropped against the USD the most in two weeks as a national poll showed that the U.K. may face a minority government after the upper house election this July. The GBP/USD fell 1.1 percent to 1.5034 while the EUR/GBP rose 0.3 percent to 90.83 yesterday. Futures traders at the CME are more bearish than ever on GBP amid concern that the currency’s worst annual start in 13 years will continue.The bearish gamblers outnumber the bulls by eight times more than George Soros made $1bln betting against the sterling in 1992. The USD extended its gains versus the GBP during the early Asia trading hours on speculation that the Federal Reserve may eliminate its commitment to key interest rates near zero for an “extended period” at its meeting today. The EUR/USD declined on Monday as euro-zone officials damped speculation down that the Finance Ministers will adopt a rescue strategy to bail out Greece this week. The euro-zone still hopes that Greece’s budget cuts will make a bailout unnecessary.

The CHF climbed against the EUR to its highest level in almost 17 months as a government report showed that the annual producer and import prices declined at the slowest pace in more than a year adding signs that the SNB may stop selling its own currency. The central bank started selling a year ago to contain declining consumer prices and to prevent from a deflation.

The AUD/JPY weakened for a second day on concern the minutes of its central bank’s March meeting will signal a slower pace to future interest rate increases after the bank already rose borrowing costs to 4 percent at its gathering.

The demand for NZD/USD was limited on concern a U.S. report may show that the housing starts dropped in February; raising speculation the global recovery is slowing which cuts demand for so called higher-yielding assets.

Daily Technical Analysis - Our Focus Currencies for Today

GBP/USD (2 Hour)

After the GBP broke through its short-term support as shown in our report yesterday, the currency pair declined near to the 1.5000 level. Thus it seems unlikely to cross the overall longterm bearish trend-line rather we maybe have to allow for a continuing bearish movement near to 1.4872 if the support around the 1.5000 level won’t be strong enough.

Intraday Support & Resistance (H2)

EUR/GBP (2 Hour)

Since the middle of February the EUR/GBP has been trading close to a bullish trend-line and touched already its resistance around 0.9143 twice. Now it remains to be seen if the trend could support the bulls once again to climb over the resistance around 0.9100 otherwise it may fall back near to its support around 0.9046.

Intraday Support & Resistance (H2)

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