The Greek Fix - Cable Falls by Michael Boutros

Asian markets and European markets were broadly stronger today on hopes the Greek debt crisis is nearing a resolution. As EU officials commenced with discussions in Athens today, top monetary official Olli Rehn urged Greece to take greater austerity measures and asked that the "government announce new measures in the coming days." Statements from EU officials reaffirming their support to the Greek people and authorities had given the euro some footing. With the Eurozone reporting an unexpected fall in unemployment, the single currency had rallied up to 1.3650 early in London trade before diving down to 1.3510 at noon local time. The euro resumes its downward trend, holding its downward channel dating back to the Dec 3rd highs. A move below the 1.35 handle leaves support at 1.3420, followed by 1.34 and 1.3380. Traders are eyeing longer term targets at 1.3090 followed by the 1.30 handle and 1.2880. A sustained rally is possible with a break of 1.3660, leaving supply at 1.3750 and 1.3830.


Cable Takes a Pounding

Speculation on the risk of a hung parliament over the weekend put pressure on the pound today as it plummeted to 10-month lows vs. the greenback, and one-year lows vs. the yen. A hung parliament is sure to add uncertainty to an already fragile market, as questions arise as to how this may affect the strength of the UK's already weak recovery. This comes a week after Bank of England Governor Mervyn King hinted to the possibility of implementing additional quantitative easing measures to prevent a slide back into recession. Reports on Mortgage approvals today came in weaker than expected, triggering a heavy sell off, sending cable down 2.5% below the 1.49 handle vs. the dollar and 132 vs. the yen. Having broken through the 1.5070 support level, the sterling now faces further losses down to 1.4780. A break here leaves demand at 1.4720 followed by 1.4590. Stability for the pound takes footing with a break above 1.5240 which rests with the 61.8% Fibonacci extensions level using the Jan 19th and Feb 17th crests, and the Feb 5th trough. Further up, resistance lies at the monthly pivot at 1.5325 followed by 1.5542.