EURUSD Breaks Above 90 Day Moving Average at 1.3315 Yesterday But Fails To Hold The Break

• EURUSD breaks above 90 day moving average at 1.3315 yesterday but fails to hold the break and falls back into the US close.
• JPY weakens versus USD and loses ground to record fresh 2012 highs versus GBP and EUR as USD breaks above the cloud at 77.44
• Greek debacle continues as alleged all party agreement now awaits parliamentary vote of approval scheduled for Sunday
• Gold slips back under $1730 ahead of London opening as USD gains some ground overnight as Oil retreats back underneath $100, trading near $99.50
• USD reverses early gains versus Europe as EURUSD lifts off lows near 1.3240 despite European equity markets opening lower
• EURUSD remains in tight range between 1.3240-90 as markets remain live to any Greek based comments/headlines

Good morning. Well yesterday was an extremely difficult day. There was a good deal of volatility with a relatively tight range.

That made for some very sporadic price action between 1.3240 and 1.3300.

Eventually after reacting to many varying Greek based headlines the EURUSD managed to break back over 1.3300 in afternoon trading only to fail at 1.3320.

That was rather strange given the effort required to push it above the 90 day moving average at 1.3315. The price however didn’t end the day above that level and ebbed slowly back towards 1.3280 by the US close.

Earlier in the day as equities moved higher, gold reversed its earlier losses under $1730 to trade rapidly over $1750.

That move ran out of steam again overnight and earlier this morning as the price slipped through $1730 again a rush of stop loss selling ensued, taking the rate back to $1715.

That move coincided with a general move higher in the dollar as the EURUSD briefly slipped under 1.3240, triggering some stop losses in the process.

However since then the EURUSD has recovered again back near the US close at 1.3280 even as European equity markets open lower.

GBPUSD has also recovered from earlier lows as renewed GBPJPY buying interest helped lift the pair in addition to a general relapse in the USD index.

The Bank of England did as was expected yesterday and increased its QE by £50 billion to £325 billion.

The initial reaction was that the pound rallied but didn’t move outside of its previous overnight range versus the dollar.

It did later weaken overnight but on a trade weighted basis and the move by the BOE has done little to dent the currency, particularly as the move was widely expected in addition to being taken as an overall positive step for the economy.

Furthermore the currency has continued to gain versus the JPY and the AUD. Despite moving over 0.8400 again the EURGBP has failed to convincingly break that level and is falling back again from there this morning as the GBP outperforms the EUR.

Yesterday afternoon the main mover was the JPY which weakened steadily across the board. USDJPY traded back over the top of the cloud at 77.44 and that helped further gains towards 77.75 ahead of the US close.

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That move was also linked to good demand to buy GBPJPY, EURJPY and to a lesser extent AUDJPY. The latter has however been reversed overnight – more on the AUD in a second.

The JPY continues to look weak once again this morning and despite the lower equities there seems to be little demand to buy the Japanese currency.

There is talk that the usual repatriation demand, that is normally seen as we approach the Japanese financial year which is on 31 March, is going to much less than normal this year.

That, in addition to continuing concerns over the Japanese recovery and their economic outlook as a whole, is definitely helping to push the currency lower.

The general risk environment being positive still is also helping the likes of GBPJPY and EURJPY reverse their extremely oversold medium term levels.

The AUD has weakened overnight following some weak data and comments from the RBA that they are not averse to lowering interest rates as their most recent interest rate decision would suggest.

That helped the AUDUSD turn back under 1.0700 and in the process pushing EURAUD higher as well as seeing the AUD weaken generally across the board.

The short term price action in the EUR is still very skittish ahead of the weekend. It’s still reacting very quickly to any Greek based headlines and comments, whilst not at this stage going anywhere.

Further demands from the EU in general and the Germans in particular, are really not helping the overall confidence in just how this whole situation is going to play out.

The Greek coalition partners have, it seems, reached an agreement on pension reform and other cuts that were seemingly a sticking point to arriving at the consensus required to satisfy the Troika and the EU group.

Clearly there is little trust or belief from both camps that the Greeks will actually live up to their obligations and therefore further aid has been delayed yet again until more concrete assurances can be given.

Whilst all this continues the clock is ticking and all I can see is that the more the EU pushes the more there is chance that Greece will throw in the towel on its EU membership.

Whilst I sympathize with both camps I do think that the EU is really putting a gun to the Greeks heads here at the same time as being adamant that no one wants to see Greece leave the union.

It looks as if we are set for another weekend of uncertainty now that we are told that the Greek parliament is due to vote on this latest package on Sunday evening.

The price action in the EURUSD is most definitely reflecting that as irresistible force meets immovable object.

Clearly from the commentary and situation this morning there are serious doubts now as to how this whole saga is going to actually going to end up.

If Greece fails and ends up leaving the EUR then the currency is going to suffer a serious setback.