It 8217 s expected to be a pivotal week for the eurozone

USD/JPY

Range: 77.89-78.11

Support: 77.30

Resistance: 78.80

USD/JPY shrugged off the robust US jobs data report on Friday, with the headline number coming in as expected. The unemployment rate dropping to 8.6% was seen to be reflected in the participation rate, dropping due to workers leaving the labour market due to frustration. All in all, as Yellen commented last week, QE3 in the US still remains a distinct possibility. Overnight has been quiet for the pair as we saw the usual ‘ Gotobi ‘ day demand from Importers going into the Tokyo fix.

EUR/USD

Range: 1.3375-1.3441

Support: 1.3208

Resistance: 1.3615

It’s a very important week for the single currency, with scope for the ECB to cut rates on Thursday and the market looking for a solid plan from the EU summit this week. The weekend news was mixed, with Italy announcing E30 billion in new austerity measures and with Angela Merkel and Nicholas Sarkozy meeting today to outline agreements ahead of the EU Summit, with fresh speculation that the ECB is considering an E1 trillion cash injection into eurozone sovereign bonds. That said, German paper Der Spiegel hinted that Germany is planning to bail out Commerzbank, which kept a negative tone to trade. We also note the CFTC which reported record euro short positions in the market.

GBP/USD

Range: 1.5589 – 1.5635

Support: 1.5500

Resistance: 1.5800

The strength of the pound sterling lies firmly in the hands of risk trade as the eurozone news dominates proceedings. At 9.28am today we see the release of services PMI data for the UK, with expectations for a reading of 50.7. The Bank of England meets on Thursday this week and with such doom and gloom surrounding the UK economy, there is a chance that more QE could be announced although February remains the preferred month for analysts.

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