The Single currency has started the week underpinned by the Greek parliament approval of new austerities measures including 22% cutting of the minimum wage and also cutting of 150k public sectors jobs by 2015 with 15k of them to be cut within this year to reduce this year deficit to GDP percentage 1.5% to smooth the way for the EU Fin ministers to an announcement the beginning of the €130B second bailing out plan for Greece later this week when they meet in Brussels to help it to avoid default on 20th of next month, when it is to meet €14.4b due to be paid by God's will.

The single currency could open the week above 1.32 versus the greenback in the beginning of this week after it has closed last week below it on worries about passing these new austerities measures through the Greek parliament amid streets riots against them in Greece.

The Single currency came also under pressure by the end of the week with the ECB's worries about the inflation upside risks easing down significantly suggesting keeping its stimulating efforts for longer period putting pressure on the borrowing costs with no fear of the prices rising.

The ECB has removed from its assessment last Thursday after keeping the interest rate unchanged at 1% its recent repeated mantra saying that the inflation is expected to be above its target for several months ahead replacing it with risks to the medium-term outlook for price developments remain broadly balanced.

On the upside, they relate to higher than assumed increases in indirect taxes and administered prices as well as increases in the commodities prices while the main downside risks relate to the impact of weaker than expected growth in the euro area and globally and that will ensure a firm anchoring of inflation expectations in line with the ECB aim of maintaining inflation rates below but close to 2% over the medium term and such anchoring is a prerequisite for monetary policy to make its contribution to supporting economic growth and jobs creation in the euro area.

The ECB is expected to start offering new 1% yearly 3 years loans to the EU banking sector with easier collateral rules can open door for the small banks too to get use of them which can make the demand for this new round of loans more than last December round which has ended with 489b by lending 523 banks forming another weight on the single currency over the short term and over the long term, if these amples of liquidities have not been used as buffering for capital restructure of these banks not as a given chance for carrying risky assets longer or loading higher riskier assets getting use of the interest rate differential between them and the ECB offer which can lead to strong unreliable exposure for making a quick profit specially if the growth pace  continued to be at its current soft rates.

God willing, EURUSD can meet now resistance again at 1.3320 whereas it has failed to continue rising up last Thursday easing back to 1.3154 last Friday and in the case of getting over 1.3320, it can another resistance at 1.3546 before 1.3613 while getting down again from here can be met by supporting levels at 1.3154, 1.3088, 1.3025 before the psychological level at 1.30 which can be followed by another supporting levels at 1.2930, 1.2874 before 1.2631 again whereas the pair could rebound to these current levels underpinned by easing of the markets EU Debt crisis worries on successful EU bonds auctions could drag its yields down sufficiently comparing with last November highs thanks to the ECB efforts for lowering the cost of borrowing.

Kind Regards

FX Market Strategist

Walid Salah El Din