Daily FX Wrap: March 29, 2012

The pair finished the session lower after less than impressive bond auction by the Italian Treasury prompted concerns over future debt sales and in turn sustainability of the debt reduction plan. In terms of other EU related commentary, S&P’s Kraemer has said Greece will probably have to restructure its debt again and this may involve bailout partners such as the IMF.

While IMF's Thomsen said Greece has made aggressive fiscal adjustments, although there is still uncertainty as to whether Greece can regain market access, and it will take a decade or longer to become fully competitive. In terms of technical levels, supports are seen at the 10DMA line at 1.3258, followed by the 21DMA line at 1.3208. On the other hand, resistance levels are seen at the 21-Day Upper Bollinger Level at 1.3378, followed by 1.3385 (March 27 high).

GBP/USD

The pair traded in tandem with EUR/USD throughout the session and as a result settled the lower amid renewed concerns over the financial stability in Europe following somewhat lacklustre demand for Italian paper. Of note, UK house prices slumped in March as the boost from the tax-break for first time buyers came to an end, according to mortgage lender Nationwide. The lender has commented that the challenging economic backdrop will likely weigh on house prices over the next 12 months.

Separately to this, Standard Chartered is concerned by the ‘interventionist’ way the UK’s FPC has defined its role and that it appears blind to the risks to financial stability created by central banks’ new and uncharted actions, according to the company’s CEO Sands. In terms of technical levels, supports are seen at the 200DMA line at 1.5850, followed by the 21DMA line at 1.5819. On the other hand, resistance levels are seen at 1.6002, 1.6015 and then at 1.6095.

USD/JPY

The pair settled lower on the back of an influx of risk averse trade flows as market participants continued to fret over the financial stability in Spain and Italy. In terms of technical levels, supports are seen at 81.46/07 and then at 80.59. On the other hand, resistance levels are seen at 82.70/97 and then at 83.23.