EUR/USD 

The pair settled the session little changed and continued to benefit from the touted Euro short- squeeze as market participants continued to price-in potential bond buying by the ECB. As a result, the short-end of the curve across the peripheral EU bond markets outperformed, that’s in spite of the fact that Spain is yet to declare the need for external help. On that note, Spanish Finance Minister De Guindos said Spain is in no rush to request an EU bailout and can afford to wait until more information regarding a possible EU assistance programme comes to light. In other news, ECB’s Visco said “we can expect more expansive ECB policy in the next few months”, potentially a rate cut. He also added that ECB’s August 2nd meeting was a turning point. In terms of technical levels, supports are seen at the 30DMA line at 1.2322 and then at the 10DMA line at 1.2252. On the other hand, resistance levels are seen at 1.2400 and then at 1.2444.

GBP/USD

The pair trended lower throughout the session as market participants looked forward to the release of the latest Inflation Report from the BoE later on in the week. According to press reports, the BoE is expected to say in its August Inflation Report that the British economy will come to a standstill this year with virtually zero growth in 2012 as a whole, opening the door to more stimulus in the coming months. In terms of technical levels, supports are seen at 1.5490/58 and then at 1.5429. On the other hand, resistance levels are seen at 1.5666/80 and then at 1.5691.

USD/JPY

There was little in terms of Japan specific commentary and instead the price action was driven by the newsflow relating to the Eurozone sovereign debt crisis. Also, the fact that the BoJ are unlikely to ease the policy further at this week’s meeting also weighed on the pair. In terms of technical levels, supports are seen at 78.07/00 and then at 77.90. On the other hand, resistance levels are seen at 78.78/83 and then at 79.00.