Currency markets remain relatively lively this week as news and developments continue coming in day after day feeding traders’ appetite. The main focus remains on Greece and the possibility of an exit from the Eurozone as yesterday the Greek PM Alexis Tsipras addresses the European Parliament and at the same time his new Fin Min sent their request for a new program to the ESM, the European bailout fund.
The Greek government committed that today they will present their intended reforms and domestic economy policies that will allow the rest of its European partners approve the new loan and allow Greek banks to resume their funding from the ECB. The Euro benefited from this fresh optimism but it goes without saying that its bias hinges on how the rest of the Eurozone receives this new proposal today.
The price action yesterday was strongly bullish as the recent developments with Greece submitting an ESM request and promising to present its reforms’ plans today allowed the Euro to mount a correction rally from its 1.0920 lows. This morning the Single currency is trading just above the 1.1100 area which is considered an important pivot level for the medium term horizon waiting for fresh news from Brussels. A further extension of the rally could see the Euro rallying towards the 1.1200 area.
Cable on the other hand remained bearish and broke below the 1.5400 support level over the past 24 hours even though it managed to partially recover overnight. The bias remains to the downside as Chancellor Osbourne revealed the country’s new budget yesterday including a number of important changes.
From a technical standpoint, we could see further weakness today since there are no reports scheduled for release and today’s Rate Decision is considered a non-event as no press statement will be released.
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