Forex - FX on Standby Till Monday

Forex News and Events:

Well it seems that Europe's new love affair with deadlines continues with a new one being set for next Monday. Late on Wednesday, the Eurogroup released their conference call statement, that had replaced the physical meeting. The statement said that "all the necessary decisions" on Greece regarding the extra €325bn of austerity measure, would be postponed until next Monday. This would allow the troika time to present its Greek debt sustainability report. In regards to the mysterious €325mln cuts which had been "identified" as a key sticking point, the report went on to say that "further considerations" were in the process. Risk tumbled on the news that despite being on course for a head on collision with March 20th, policy makers were still willing to play political games. So the war of words began, producing nothing more than unsettling traders. Greek finance minister Evangelos Venizelos provided a strongly worded response accusing European policy makers of "playing with fire". German finance minister Wolfgang Schaeuble, said he wanted to "help" Greece but would not "pour money into a bottomless pit". Then Greek president Carolos Papoulias jumped into the fray stating "I do not accept having my country taunted by Mr Schaeuble, as a Greek I do not accept it. Who is Mr Schaeuble to taunt Greece?" The belief that April general Greek elections might reverse all the current agreements has European leaders and debt holders widely concern. The Greek conservative leader who is expected to win the election attempted to calm nerves by saying if his party "wins the next election in Greece, we will remain committed" to the conditions of the bail-out, its "objectives, targets and key policies". But from the fringes European Conservative and Reformist groups of MEP told EU parliament resources would be "better employed drafting and implementing a plan for the orderly withdrawal of Greece from the euro".

Today's Key Issues (time in GMT):

09:00 EUR Current Account nsa (Dec) EUR bn n/a 1.0 n/a
09:30 GBP Retail Sales Ex Auto Fuel
12:00 CAD CPI (Jan) y-o-y n/a 2.30% 2.30%
12:00 CAD Bank Canada CPI Core (Jan)
13:30 USD CPI (Jan)
13:30 USD CPI Ex Food & Energy y/y prior /exp 2.20%
15:00 USD Leading indicators index, % m/m prior 0.4 exp 0.4

The Risk Today:

EurUsd EURUSD weakness was lot shorter then we had expected, as the pair provided us with an impressive risk reversal mid-afternoon yesterday. The lack of clarity created by this weeks break of 1-month uptrend and 1-week downtrend (but well short of entering uptrend channel territory) suggests we are likely to see a period of range trading. The first resistance stands at 1.3190 (15th Feb high), 1.3215-20 (back side of the former uptrend), then 1.3320 (9th Feb high), then above there we have clear skies until next resistance at 1.3461 (8th Dec high). Next supports in the cross hairs will be 1.3099 (16th Feb low), 1.2930 (25th Jan low), 1.2875 (23nd Jan low), 1.2839 (19th Jan low), and 1.2711 (17th Jan US session low).

GbpUsd GBPUSD has staged a very impressive in the last 24 hrs, making short work of near term resistance. However, while the bullish move has been aggressive, the key question is its sustainability. The cable remains well short of the 1-month uptrend channel territory and therefore we will remain neutral. On the topside there is plenty of resistance cluttering the path to recovery; first resistance is now 1.5827 (intraday high), 1.5885 (9th Feb high), 1.5932 (15th Nov high), and 1.6000 psychological level. Should the bears resume their sell-off in the coming sessions, watch for supports to come into play at 1.5770 ((14th Feb high), 1.5644 (27th Jan low), 1.5533 (24th Jan low), and 1.5517 (23rd Jan low).

UsdJpy The pair continues to find buyers despite this weeks general pullback in risk appetite. USDJPY has finally managed to rally through the stubborn 78.30 & 78.67 resistance levels and finally taking out psychological resistance at 79.00; meaning that the recent rally has not been a fluke and the bulls remain in firm command of the pair in the coming sessions. That said we stand ready for a short term correction as some indicators, such as RSI, stand noticeable in overbought territory. The next pockets of supply above us are noted at 79.53 (31st Oct high), which would trigger an extension to 80.24 (4th Aug high), and 81.48 (8th Jul high). On the downside, technical levels below are largely unchanged; first minor support is 79.00 (intraday barrier), 78.68 (14th July 11 high), 77.36 (13th Feb low), then 76.50 (7th Feb low), 76.04 (1st Feb low), 75.54 (record low seen on 31st Oct), 75.00 (major psychological level).

UsdChf USDCHF slumped sharply to a low of 0.9181 today, breaking out the of the 1-week uptrend channel. However, we don’t see the downward correction as halting the pairs bullish potential as the pair continues to attract good bids above 0.9150 levels. After the break of 0.9263 yesterday, now exposes the path to 0.9340 (25th Jan high), 0.9381 (23rd Jan high), 0.9413 (19th Jan high), and 0.9497 (18th Jan high). Below us, first support is 0.9103 (10th & 13th Feb lows), then 0.9066 (30th Nov low), 0.9000 (psychological support), 0.8953 (11th Nov low), 0.8922 (9th Nov low), and 0.8761 (3rd Nov low).

Resistance and Support:

S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot