Daily FX Analysis: Euro Pushes Higher Before ECB Rate Cut Rumours

Today we saw a relatively quiet trading day with the main highlight the Italian Political situation over the weekend being resolved and pushing market slightly higher all day. Some interesting comments in the FT today though did suggest that Italy could be on the verge of leading a revolt against austerity in Europe; although we suspect we took the comments a little too literally, it does beg an interesting question on whether a grand coalition can effectively drive the harsh austerity measures required.

This week's focus is primarily on the ECB meeting and the 'will they, won't they' on rate cuts. Friends at UBS reckon slightly over 50% of all analysts now suspect a rate cut. Our personal opinion is that data isn't bad enough yet and it will come later in the summer, offering the potential for a sharp push higher in the Euro; however, we don't play hunches and so will wait for clear market signals or the breakouts from the 'will they, won't they' decision either way.

Tomorrow will see end of month flows so we could see some large moves in currency pairs, however we do have a light data day so keep an eye on the European and US opens for hints of intraday trends.

EUR/USD
Euro pushed higher today and tested the 1.3100 level several times, if the pair can break this we could easily see a quick test of the 1.3200 level. Our internal in house order book systems remain long this pair. We see the potential for a test into the 1.3200's this week but it will be heavily dependant on ECB rate cut and Draghi comments.
Personal Bias: Bearish
Support: 1.3050 / 1.3000
Resistance: 1.3170 / 1.3200
My Strategy: Stand aside wait for clear signals.


GBP/USD
Pound pushed slightly higher today but struggled to get past resistance at the 1.5530 level on light volume; as such it put in a minor Bearish pin; we could see a move lower from here but would prefer to wait for clear signals.
Personal Bias: Neutral
Support: 1.5430
Resistance: 1.5530 / 1.5615
My Strategy: sidelined awaiting clear signals


AUD/USD
Pair pushed higher today, we like looking for shorts from the 200 day moving average at the 1.0400 mark.
Personal Bias: Bearish
Support: 1.0240
Resistance: 1.0350
My Strategy: stand aside await clear signals - look for short options around the 1.0400.


USD/JPY
Pair remained relatively static today, we continue to like buying this pair on failed tests of support.
Personal Bias: Bullish
Support: 97.00 / 96.15
Resistance: 100 / 98.50
My Strategy: Look for long entries off of support