Volatility at full speed while Mr. Draghi is conducting the ECB monthly scheduled press conference, the euro dollar pair jumped to 1.3273 when the head of the European central bank narrative changed, by changing his outlook from tentative signs of stabilization to signs of stabilization and also emphasized the LTRO operations that were done recently were an unquestionable success resulting in sentiment boost in financial markets.
The central bank held rates steady, mentioned a rate cut was not discussed this meeting. ECB also revised their growth forecast lower while inflation higher in 2012; Downgrading their GDP estimate to a range between -0.5% and 0.3% in 2012 VS -0.4% and 1.0% in December, while inflation in a range between 2.1% and 2.7% in 2012 VS between 1.5% and 2.5%.
Markets are anticipating the main risk-event for this week, which the final deal between bond holders and the Greek government. An agreement could also push the euro higher for the short term, however we look for downside reversal from higher levels below 1.3500 area. Although failing to agree on the bond swap settlement seems unlikely, and accordingly such a thing could trigger major panic across markets and send the euro to fresh lows.
The EUR/USD pair maintains its gains so far trading above the key resistance at 1.3250. In addition to that, the price failed to hold below the main ascending trend line that carried price from 1.26's lows. Accordingly, we look for stability above the level eyeing 1.3320 as the next target for the pair, followed by 1.3370. Failure to hold above 1.3200 shall be a negative sign for the euro bulls where we may see another test of the lows around 1.3100 followed by 1.3000. The pair is up more than 120 pips since starting the session at 1.3148.
The GBP/USD rallied today as well, where it completed a retest of the breached neckline for the head and shoulders pattern in addition to testing the short term ascending trend line that was broken yesterday just above 1.5800, where it found resistance to pullback slightly currently trading around 1.5780. We anticipate the pair to find support near 1.5750 areas today followed by 1.5700 a breach below 1.5700 shall trigger further selloff and resume the downside bias towards 1.5650.
USD/JPY resumed the bullish bias today, as risky trade was favored amid optimism over the bond swap deal. The pair opened the day at 81.08 to print a daily high at 81.82, the recent high at 81.85 is the main obstacle towards 82.50 areas, while 80.50 is the major swing low that should be monitored within the upcoming period.