EU Summit sends a positive message but it s not the Bazooka

EUR/USD

Range: 1.2431-1.2629

Support: 1.2400

Resistance: 1.2700

Positive news from the EU summit buoyed risk overnight seeing the single currency rally 200 points to 1.2629 as headlines hit the wires catching a pessimistic market on the back foot. In my opinion the statement still lacks substance and it now remains to be seen how long it takes to implement the measures. It was a bad night for the Germans all round with Chancellor Merkel surprisingly quite on her hard line approach may be tempered with losing to the Italians? I’m not convinced by the rally but I’m wary of the month end rebalancing flow today and will be patient to trade the 1.2450-1.2650 range.

GBP/USD

Range: 1.5508 – 1.5648

Support: 1.5500

Resistance: 1.5700

Sterling takes its lead from the Euro and with general risk positive sentiment following the statement from European Council President Van Rompuy cable trades towards the high end of the weeks range. EUR/GBP rallied 90 points on the announcement triggering stops through 0.8050 but with no UK data and only US personal spending numbers and Chicago PMI data this afternoon I expect the month end re-balancing data to dominate the Queens currency.

Summary of EU headlines

Van Rompuy: eurozone reaffirms commitment to use EFSF and ESM flexibly and efficiently to stabilise markets
Euro leaders open bailout funds for governments meeting conditions
Euro leaders agree to open funds without austerity programs
Van Rompuy: ECB to act as agent for rescue funds in operations
Banks can recapped directly with aid funds
Euro finance ministers to enact deal at July 9 meeting

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