Expectations of an announcement about a joint EU-IMF bailout of Greece within days have helped soothe investor anxiety about an imminent Greek default. And as such has seen the Euro continuing to pull away from this week’s 12 month lows.

With the Greece saga pushed into the background for the time being the market is able to focus on continuing improved economic data, and as such risk appetite has improved.

Also helping to buoy sentiment in Europe was yesterday’s release of Euro zone economic sentiment which picked up significantly to a 25-month high in April moving above its long-term average of 100.0.

However the market will remain cautious as we have been here many times before with respect to Greece only to be disappointed, and with Europe, UK and Japan being on holiday on Monday, we could see some significant position adjustment today ahead of the weekend and month end.

On the sterling side of things last nights final UK leadership debate on the economy saw a much improved performance by the Conservative leader David Cameron with a number of polls showing him winning the debate and this has helped support sterling.

The main focus this afternoon will be on the US, with the first release of Q1 GDP data which is expected to see an annualised rise of 3.4%. The release of Michigan Confidence figures for April will be also closely scrutinised for continued improvement with an expectation of a rise to 71.

EURUSD – the Euro has continued its rebound from its recent lows yesterday but this only looks like it could be a brief respite. The pressure on the Euro should continue to intensify over the coming days targeting 1.3050/60, area, while only a break above 1.3420 could see a spill over towards 1.3500. The longer term upside resistance remains below trend line resistance at 1.3610 and 1.3700, last week’s highs.

GBPUSD – the pound continues to remain in its broader range between 1.5100 and 1.5500 as it has taken relative back seat to the wider Greece story. The markets remain concerned about sovereign debt risks and the UK’s own fiscal problems.

However this month’s low around the 1.5110/20 area has continued to hold and remains the key obstacle to a re-test of the 1.5000 levels last seen at the end of March.

EURGBP – the expectation of an announcement about a Greece aid package saw the Euro rebound, however the gains were quickly relinquished as the Euro has started to slide back towards the low this year between 0.8600/05 area. This continues to act as some form of line in the sand preventing further Euro losses for the time being. A break of this key level at 0.8600/05 could well open up a move towards the lows in 2009 around the 0.8400 area. The Euro needs to get above yesterday’s highs at the 0.8730/40 area to re-test last week’s high around 0.8830/40.

USDJPY – yesterday’s Japanese holiday saw the dollar continue its gains against the yen as it pushed close to its recent range highs of 94.70/80. It is currently finding trend line resistance around the 94.30 area and this is currently capping dollar gains.

As we head into Japanese Golden Week a break of this trend line would target a move towards 97.50, but while this level holds the dollar could well drift back towards trend line support around the 92.60 level, from the March lows at 88.10.

CFDs, FX and Spread Trading are leveraged products. They carry a high level of risk to your capital and it is possible to lose more than your initial investment. These products may not be suitable for all investors. Ensure you understand the risks involved and seek independent advice if and where necessary.

Trading News from Michael Hewson, Analyst, CMC Markets.

CMC Markets is authorised and regulated in the UK by the Financial Services Authority (FSA). FSA Registration no. 173730.

Note that CMC Markets provide an execution-only service. Any CMC Markets research and charting tools are indicative – they are provided for information purposes – they must not be relied upon as investment advice.

The above material should not be construed as a recommendation or offer to buy or offer to sell or solicitation of any offer to buy any security or other financial instrument by CMC Markets. The material is not a recommendation. You should seek independent advice as to a) your suitability to speculate in any related markets b) your ability to assume the associated risks c) the legal, tax and accounting characteristics and consequences of any transaction.

Higher petrol prices have sent UK inflation upwards again and that means that the Governor of the Bank of England, Mervyn King, might have to sharpen his pencil and write to the Chancellor if the trend persists.

There is a strange rule in the UK whereby if inflation is too high, or too low, the Governor has to personally send a letter to the Chancellor explaining why. One hopes that they employ more modern techniques elsewhere at The Bank.

Looking further into the inflation numbers and you can see that not only has a decline in the Pound led to higher petrol prices, which has therefore contributed to the increased rate of inflation, but many retailers were reluctant to pass on the UK VAT increase straight away. As the retailers have been gradually (re)introducing that VAT increase that has had a lagging effect on prices getting higher. So, it is not just overall inflation that is on the up, but core inflation (stripping out energy and food prices) is too.

In the UK, Gas is as expensive now as it has ever been. That just shows how much influence currency fluctuations can have on every day life. The last time prices were at these levels was when the price of crude oil was above $140 a barrel in July 2008. At the moment, crude oil is priced at a little over half that level. Add a few small tax increases and we are paying extreme levels due to the fall of the GBP/USD exchange rate.

There are, of course, ways to hedge against this increase. You could place a Contract for Difference (CFD) on the price of crude oil to rise and/or a CFD on the GBP/USD rate to fall.

As a tool for speculating, CFDs have a number of advantages over other traditional options like buying and selling shares. CFDs offer a wide range of worldwide markets so that investors are not just limited to stocks. You can trade currency pairs, commodity prices, stock market indices and interest rates.

CFDs also allows investors to speculate on the value of an asset to either increase or decrease. With normal share trading you are limited to speculating on a stock to increase. CFDS also lets you profit on stocks and shares, oil, gold etc if they go down in value. So in theory, you could hedge against any further price increases. However note that as with all investments such as trading stocks, pensions, housing etc, you can lose money. With a Contract for Difference you can lose more than your initial investment.

Also CFDs are suited to short term trades, anything from 1 day to 3 months. There is often a small charge for every extra day that you keep your trade running. After 1-2 months these charges start to add up.

Please do note that CFDs carry a high level of risk so ensure trading matches your investment objectives. Familiarise yourself with the risks. Where necessary, seek independent advice.

If you want to trade a variety of markets over short periods then CFDs are worth exploring further. If you want to hedge against long term price increases thy are probably not the best tool.

Like the English you may just have to put up with the price increases and display a stiff upper lip.

Yesterday’s decision by Standard and Poors to cut Greece’s sovereign debt to “junk” status and Portugal’s status from A+ to A- has sent the bond markets into meltdown and equity investors towards the exits, as risk aversion saw stock markets post their biggest one day declines in weeks.

It has also thrown into doubt the ability of Greece to even fund its day to day funding operations with the European Central Bank. If Moody’s and Fitch follow Standard and Poor’s in downgrading Greece to “junk” status as well they might, then Greek bonds will be ineligible as collateral at the European Central Bank.

It has also served to make the market realise that because of the fear of creating a precedent, even if Greece is bailed out, due to the uncertainty over the final price tag, neither Germany, nor the IMF would have deep enough pockets to bail out Portugal, Spain and other European countries with large deficit problems.

This has now become an issue of credibility with the Euro itself, and the likelihood is that some form of debt re-structuring may now be the only option for Greece, despite the IMF and EU commission insisting that this is out of the question.

Portugal’s debt downgrade also throws into sharp focus, how the problems of one country can spread very quickly once investors lose confidence. Portugal along with other EU members also has the added problem of having to contribute to its portion of the Greek bail-out money, though at current market rates this would seem unlikely to happen now with 10 year Portuguese bonds spiking above 5.50% yesterday.

The US dollar has been one of the main beneficiaries of this flight to safety, hitting 11 month highs against a basket of currencies, and today’s Federal Reserve rate meeting while expected to leave interest rates unchanged for now, any change in tone with respect to rates would likely boost the dollar further. Chairman Bernanke is also likely to remain upbeat on the US economy, which would be dollar positive in any case, but there is also the likelihood that US rates could well start to edge up before European ones over the next few months.

EURUSD – the Euro continues to make new 11 month lows on the back of yesterday afternoon’s debt downgrades of Greece and Portugal. It would appear that the unless something radically alters over the next few days the Euro could well test 1.3050/60, which is a 38.2% retracement of the 8 year up move from the 2000 lows at 0.8230 and the 2008 highs at 1.6020. A break below 1.3050/60 would then open up sub 1.3000 towards 1.2750.

A break above 1.3420 could see a spill over towards 1.3500. The longer term upside resistance remains below trend line resistance at 1.3610/20 and 1.3700, last weeks highs.

GBPUSD – the pound has dropped away from its range highs around 1.5500 as the US dollar benefits from safe-haven buying after European debt downgrades yesterday afternoon.

The bigger resistance remains the 1.5580 area which is 38.2% retracement of the 1.6875/1.4780 down move.

On the flip side a break below trend line support at 1.5230/40 would likely re-target the April lows at 1.5120, and even 1.5000.

EURGBP – the Euro appears to be finding a short term base around the low this year between 0.8600/05 area. This appears to be some sort of line in the sand preventing further Euro losses for the time being. A break of this key level could well open up a move towards the lows in 2009 around the 0.8400 area.

The Euro should find some resistance around 0.8740 on any rallies, as well as this weeks high around 0.8830/40.

USDJPY – increased risk aversion has sent the dollar lower against the yen breaking below support at 93.20. This should now act as resistance and could send the dollar towards the 22nd April lows at 92.75. There is also trend line support at 92.30 from the March lows at 88.10.

CFDs, FX and Spread Trading are leveraged products. They carry a high level of risk to your capital and it is possible to lose more than your initial investment. These products may not be suitable for all investors. Ensure you understand the risks involved and seek independent advice if and where necessary.

Trading News from Michael Hewson, Analyst, CMC Markets.

CMC Markets is authorised and regulated in the UK by the Financial Services Authority (FSA). FSA Registration no. 173730.

Note that CMC Markets provide an execution-only service. Any CMC Markets research and charting tools are indicative – they are provided for information purposes – they must not be relied upon as investment advice.

The above material should not be construed as a recommendation or offer to buy or offer to sell or solicitation of any offer to buy any security or other financial instrument by CMC Markets. The material is not a recommendation. You should seek independent advice as to a) your suitability to speculate in any related markets b) your ability to assume the associated risks c) the legal, tax and accounting characteristics and consequences of any transaction.

Greek borrowing costs again hit new highs yesterday after Germany insisted that further austerity measures be the price for any aid.

The yield on Greek bonds jumped to over 620 points above their German equivalents after Angela Merkel insisted that Greece must agree to tough measures over many years and that Greece must provide a detailed plan to that effect.

This tough rhetoric has led to concern that Germany may find it difficult to release its part of the bail-out money amid opposition at home amongst voters and in parliament.

Portuguese and Spanish bond yields have also pushed higher over fears of contagion and stresses that their bail-out contributions may place on additional strains on their own debt problems.

The US dollar has remained fairly steady amongst all this with consumer confidence data for April due out later today expected to show a rise to 53.5 as recovery starts to take hold. Of particular interest will be the Case-Shiller home price index for February and the market will be looking for this data to build on the positive housing data of last Friday, for signs of a recovery in the housing market.

On the sterling front the release of the CBI’s distributive trades survey for April is forecast to show that the balance of retailers reporting that sales were up year-on-year climbed to +17% in April from +13% in March. This would indicate that consumer spending is slowly heading in the right direction despite some uncertainty ahead of the general election in just over a weeks time.

EURUSD – the Euro has continues to find support above 1.3200 on the back of Greece’s request for a bail-out and seems to be gaining an element of support at higher levels in the short term. A break above 1.3420 could see a spill over towards 1.3500. The longer term upside resistance remains below trend line resistance at 1.3610/20 and 1.3700, last weeks highs.

GBPUSD – the pound continues to be becalmed in a broad consolidation between the significant resistances above the 1.5500 area which was last week’s highs and a minor support zone around the 1.5420 area.

Despite the gradual move above the trend line resistance from the 17th February highs at 1.5815, which now sits at 1.5465/70 the barriers around 1.5510/20 seem to be capping the market for now. The bigger resistance remains the 1.5580 area which is 38.2% retracement of the 1.6875/1.4780 down move.

On the flip side a break below trend line support at 1.5220 would likely re-target the April lows at 1.5120.

EURGBP – the Euro appears to be finding a short term base around the low this year between 0.8600/05 area. This appears to be some sort of line in the sand preventing further Euro losses for the time being.

A break of this key level could well open up a move towards the lows in 2009 around the 0.8400 area. The Euro should find some resistance around 0.8740 on any rallies, as well as this weeks high around 0.8830/40.

USDJPY – the dollar has been unable to make much in the way of progress towards the April highs of 94.70/80 , and seems content to trade sideways above the previous highs around 93.70/80 which is now acting as an area of support. A break below the support around this area would re-target the 93.20 area.

CFDs, FX and Spread Trading are leveraged products. They carry a high level of risk to your capital and it is possible to lose more than your initial investment. These products may not be suitable for all investors. Ensure you understand the risks involved and seek independent advice if and where necessary.

Trading News from Michael Hewson, Analyst, CMC Markets.

CMC Markets is authorised and regulated in the UK by the Financial Services Authority (FSA). FSA Registration no. 173730.

Note that CMC Markets provide an execution-only service. Any CMC Markets research and charting tools are indicative – they are provided for information purposes – they must not be relied upon as investment advice.

The above material should not be construed as a recommendation or offer to buy or offer to sell or solicitation of any offer to buy any security or other financial instrument by CMC Markets. The material is not a recommendation. You should seek independent advice as to a) your suitability to speculate in any related markets b) your ability to assume the associated risks c) the legal, tax and accounting characteristics and consequences of any transaction.

Friday’s request by Greece for help with its funding crisis has caused the Euro to pull back from its lows, however relief has been tempered by the fact that Germany has insisted that any aid will have to be conditional on tougher terms over new austerity measures. There is concern in Germany that any aid will not be a one off measure.

So now we move to the next stage of the crisis.

The bailout money, if approved, will be contributed in the form of loans from member governments according to the size of their EU contributions, which means that Ireland, Portugal and Spain will have to find money which they don’t have to bail-out a country that misrepresented the size of its deficit.

I imagine Ireland will have mixed feelings about having to stump up some cash, which they don’t have, being that they haven’t asked for a bail-out, and done the right thing with austerity measures.

This story still has a lot of legs in it yet and the Euro has rallied as a result but it could well be short lived. The die has been cast and the Euro will still remain under pressure.

Risk appetite has also improved on reports that China may be about to unveil a new stimulus package as well as improving economic data out of the US which sent the Dow to 19 month highs last week.

Reports on Friday that Fed members were considering sales of Federal Reserve assets by Q3/Q4, boosted the dollar against the yen, ahead of this weeks FOMC meeting. Careful attention will again be paid to the tone of the Fed statement and the “extended period” phrase.

On the UK front the pound has pared some of Friday’s losses, after Q1 GDP came in half as much as forecast rising 0.2% instead of the 0.4% expected. The Hometrack housing survey for April showed house prices increase year on year by 1.8%. In addition weekend polls showing an increase in Conservative support, as well as divisions within the Labour party, have given the pound a bit of a boost.

EURUSD – the Euro has rallied off new 11 month lows at 1.3204 on Greece’s request for a bail-out. The longer term upside resistance remains below trend line resistance at 1.3640/50 and 1.3700, last weeks highs.

GBPUSD – the pound continues to trade in a broad triangular consolidation between the significant resistances around the 1.5470/80 area, where there is trend line resistance from the 17th February highs at 1.5815. There is also resistance at the 1.5580 area which is 38.2% retracement of the 1.6875/1.4780 down move.

On the flip side a break below trend line support at 1.5220 would likely re-target the April lows at 1.5120.

EURGBP – a test towards this years low at 0.8600 has seen a rebound after the news of the Greece bail-out. The Euro should find some resistance around 0.8740 on any rallies, as well as this weeks high around 0.8830/40.

USDJPY – increasing risk appetite on hopes of economic recovery, as well as a report on Friday that a growing bloc of FOMC members wanted to bring forward the sales of Federal Reserve assets by Q3/Q4 ahead of market expectation, sent the dollar through the range highs of 93.70/80 hitting 94.30 so far and towards this month’s high at 94.70/80. There should be some support at the previous highs at 93.70/80.

CFDs, FX and Spread Trading are leveraged products. They carry a high level of risk to your capital and it is possible to lose more than your initial investment. These products may not be suitable for all investors. Ensure you understand the risks involved and seek independent advice if and where necessary.

Trading News from Michael Hewson, Analyst, CMC Markets.

CMC Markets is authorised and regulated in the UK by the Financial Services Authority (FSA). FSA Registration no. 173730.

Note that CMC Markets provide an execution-only service. Any CMC Markets research and charting tools are indicative – they are provided for information purposes – they must not be relied upon as investment advice.

The above material should not be construed as a recommendation or offer to buy or offer to sell or solicitation of any offer to buy any security or other financial instrument by CMC Markets. The material is not a recommendation. You should seek independent advice as to a) your suitability to speculate in any related markets b) your ability to assume the associated risks c) the legal, tax and accounting characteristics and consequences of any transaction.

The Euro continues to get pummelled by the markets as the Greece debt crisis lurches on. The start of this weekends G20 meeting of finance ministers in Washington today will no doubt see the Greece issue top of the agenda, as fears abound that Greece will default and have to restructure its debt.

The news that Greece’s deficit could be as much as 14% of GDP has spooked investors and prompted Moody’s to downgrade Greece to A3 from A2 citing concerns about the government’s ability to slash its deficit and disputes over how the possible external assistance might be delivered. CDS spreads also continued to widen hitting over 600 basis points as well as affecting Portugal and Spain whose spreads went out to 270 and 175 points above their German equivalents.

Contagion is now the word that the markets fear unless the EU leaders, the Greek government and the IMF can come up with some sort of solution that can be delivered without creating further unrest within Greece, and can also satisfy the markets.

Last night’s UK leadership debate was marked by a slightly better performance by David Cameron as all three candidates performed equally well according to a variety of opinion polls. Sterling as a result was relatively unchanged against the dollar while continuing to gain against the sickly Euro.

The first estimate of UK Q1 GDP data out today is expected to show that the UK avoided a double-dip recession, and show how far the British economy grew in the first quarter of 2010, with estimates of 0.4% being the expectation amongst economists, though with some caveats about winter weather conditions maybe affecting the accuracy of their forecasts.

EURUSD – the Euro continues to remain under pressure, breaking below its previous lows at 1.3260/70 in Asia today, on widening spreads on Club Med countries bonds, and after Moody’s downgraded Greece to A3 from A2. A close below this key level would target a test of 1.3060, which is a 38.2% retracement of the entire up move from the Euro lows at 0.8230 in 2000 to the 2008 peaks at 1.6030/40.

The longer term upside resistance remains below trend line resistance at 1.3640/50 and 1.3700, last weeks highs.

GBPUSD – the pound continues to trade in a broad triangular consolidation between the significant resistances around the 1.5480/1.5500 area, where there is trend line resistance from the 17th February highs at 1.5815. There is also resistance at the 1.5580 area which is 38.2% retracement of the 1.6875/1.4780 down move.

On the flip side a break below trend line support at 1.5210/15 would likely re-target the April lows at 1.5120.

EURGBP – despite yesterday’s public finance figures the pound has benefited as a result of being the lesser of two evils, pushing below the 9 month down trend line at 0.8680 and testing below the 100 week moving average at 0.8650. A close below this key level would target a move towards this years low at 0.8600 in the short term and then the 2009 lows at 0.8400 in the longer term.

The Euro should find some resistance around 0.8740 on any rallies, as well as this weeks high around 0.8830/40.

USDJPY – currently range bound on a risk on/risk off play. Currently trading between the highs near to 93.70/80 the highs of last week, and above the 92.60/80 level, which is acting as some level of support. A break back below the 92.60/80 area re-targets 92.20 and the 91.80 level.

CFDs, FX and Spread Trading are leveraged products. They carry a high level of risk to your capital and it is possible to lose more than your initial investment. These products may not be suitable for all investors. Ensure you understand the risks involved and seek independent advice if and where necessary.

Trading News from Michael Hewson, Analyst, CMC Markets.

CMC Markets is authorised and regulated in the UK by the Financial Services Authority (FSA). FSA Registration no. 173730.

Note that CMC Markets provide an execution-only service. Any CMC Markets research and charting tools are indicative – they are provided for information purposes – they must not be relied upon as investment advice.

The above material should not be construed as a recommendation or offer to buy or offer to sell or solicitation of any offer to buy any security or other financial instrument by CMC Markets. The material is not a recommendation. You should seek independent advice as to a) your suitability to speculate in any related markets b) your ability to assume the associated risks c) the legal, tax and accounting characteristics and consequences of any transaction.

For all those who believe the American economy is back into expansion mode the National Bureau of Economic Research has a sobering message.

The NBER has seven academic economists who together comprise the ‘Business Cycle Dating Committee’. Since 1929 its job has been to identify economic peaks and troughs.

At its latest meeting the committee opined that ‘although most indicators have turned up… the determination of the trough date on the basis of current data would be premature.’

That is not to say there is no sign of growth; several of last week’s figures were positive.

US building permits and housing starts both went up in March, as the NAHB housing market index, a measure of business optimism among builders.

The Federal Reserve Banks in New York and Philadelphia both reported improvements in manufacturing activity in April and the Treasury saw inward investment more than double in February. Retail sales were up by 1.6% in the month of March, triple the increase seen in February. It was the third monthly increase in sales and the 7.6% annual gain was the biggest in more than four years.

Although the committee is not yet ready to commit itself, many economists believe the longest downturn since the Great Depression ended in the middle of last year.

They believe the US economy is on the mend, even if it will take a considerable while to return to pre-crisis levels of growth.

Sterling is back into the same 3% range that constrained it in March. With the election less than three weeks away there is little chance of any serious upward push.

Buyers of the dollar should hedge at least 50% of what they will need. If the money is required in the near future they should consider covering the whole amount.

For more information and expert guidance on the currency markets, call Moneycorp today on +44 (0)20 7589 3000. Alternatively go to www.moneycorp.com where you can open a free, no obligation Trading Facility.

European markets have managed to hold onto positive territory for much of the session and keep the bullish sentiment reverberating through this market. Markets were initially hit as UK inflation data came in higher than expected.

However some stronger performances from the retail sector and the possibility of the reopening of UK airspace helped to keep the FTSE100 in positive territory. There was also the added boost of a positive earnings reading from Goldman Sachs, which seems to have briefly taken away from the fraud investigations by the SEC.

The inflation data first thing was the biggest economic reading of the day and had many a little worried after the YoY CPI reading came in at 3.4%, slightly ahead of expectations. This saw the pound jump higher and leave many worrying that the fall we are now all expecting in the inflation number may not be as big as many had thought. This news again pointed to a tough time for the consumer but it many stopped short of suggesting it was enough for the BOE to raise rates any time soon.

The inflation fears were dismissed by some of the high street retailers and super markets as the likes of Tesco, Burberry and Associated British Food’s owned Primark all reporting good numbers while saying they saw the consumer with more spending power than first expected. Tesco was the headline act but despite posting solid numbers the shares dropped by 1.4%.

Many had expected a better performance in Europe by the worlds 4th largest retailer. It seems that the Supermarket giants have become a victim of their own success, as the expectations are getting harder to hit.

Elsewhere in earnings news it was brewer SABMiller that topped the leader board early on after another good set of results saw the company report that beer volume was up 2%. This helped the shares up 3.6%. Burberry had slipped lower as we approached the close while Associated British Foods had added 6% after both them and Tesco said that they fear of a double dip recession had now passed.

With the ash cloud now starting to clear (at least for now) some of the county’s airports began to reopen. The reaction on the stock market however was a little subdued. Shares in Easyjet and Ryanair both gained by 1.7% and 1.1% respectively while British Airways added 0.6%.

Many still expect this situation to be far from over and the precarious status of the volcano means another eruption of ash could well happen at anytime. All depends on the direction of the wind and another cloud blown our way could well result in yet more misery for the already troubled airlines.

Goldman Sachs was yet again a huge part of the days story after the troubled banking giant announced better than expected figures this afternoon. However the $3bn profit will only see a brief rest bite in the news flow as the talks of further investigations from both AIG and Lehman Brothers could well leave this very public saga with a lot longer left to run.

CFDs, FX and Spread Trading are leveraged products. They carry a high level of risk to your capital and it is possible to lose more than your initial investment. These products may not be suitable for all investors. Ensure you understand the risks involved and seek independent advice if and where necessary.

Trading News from Michael Hewson, Analyst, CMC Markets.

CMC Markets is authorised and regulated in the UK by the Financial Services Authority (FSA). FSA Registration no. 173730.

Note that CMC Markets provide an execution-only service. Any CMC Markets research and charting tools are indicative – they are provided for information purposes – they must not be relied upon as investment advice.

The above material should not be construed as a recommendation or offer to buy or offer to sell or solicitation of any offer to buy any security or other financial instrument by CMC Markets. The material is not a recommendation. You should seek independent advice as to a) your suitability to speculate in any related markets b) your ability to assume the associated risks c) the legal, tax and accounting characteristics and consequences of any transaction.

The dollar rally on Friday continued in Asia this morning as the news that the US SEC had filed a lawsuit against Goldman Sachs for securities fraud continued to be absorbed by the market.

Over the weekend it was announced that further probes were likely to be launched in the UK and Germany, while in China the government ordered banks to stop loans for third home purchases in further attempts to cool down the property sector, and rein back growth in its booming economy.

This has caused a flight to the dollar and yen as investors flee to the safety of less risky assets, while commodities have also fallen.

The Euro will likely continue to remain under pressure this week as European Union; International Monetary Fund and European Central Bank officials, who were expected start their meeting in Athens today, start laying down the terms at which Greece can tap the €45bn bailout package, while public anger continues to mount in Greece over the prospect of further austerity measures.

Ten year yields on Greek bonds have risen back to the levels of two weeks ago, above 7.3% making it almost inevitable that some form of action may be necessary. The meeting is now expected to begin April 21st because of the current flight ban in Europe.

Sterling’s weakness on Friday, which had been caused by declining consumer confidence and political uncertainty caused by a “hung” parliament, has not been soothed after weekend polls showed a surge in Liberal Democrat support at the expense of both Labour and the Tories, while one YouGov poll actually showed the Lib-Dems in the lead.

EURUSD – the single currency’s failure to take out last weeks highs around 1.3690 has weakened the case for further Euro gains in the short term. Concerns about sovereign risk default remain and these highs remain the key obstacle for a move towards 1.3800 to happen. The break back below 1.3520 late on Friday re-targets a move towards 1.3380, and the previous lows at 1.3270.

GBPUSD – the pound’s failure to take out the 1.5520 area and test the 1.5550/80 area, which was the 38.2% retracement of the down move from the November highs at 1.6875 to the lows in March at 1.4780, led to a re-test and break of the previous highs at the 1.5350 area in Asia today. This failure here could well lead to further losses back towards the 1.5120 area and in turn a re-test of 1.5000.

EURGBP – the Euro once again failed to break above the 200 day moving average at 0.8880 last week. While below this key level the Euro will continue to remain vulnerable to further downside pressure. It is currently trading in broad range between this key upside resistance and last weeks lows at 0.8740. The risk remains for a test towards the last week’s lows at 0.8740, while below 0.8880, followed by the February lows at 0.8660.

USDJPY – the yen benefited from a diminution in risk appetite late last week and broke below the 92.30 support level which we identified as the 38.2% pullback of the up move from the lows at 88.10 to the peaks this week at 94.78. The failure of this key support now opens the risk of a test towards the 50% level at 91.45 while below the 92.60/80 resistance area.

CFDs, FX and Spread Trading are leveraged products. They carry a high level of risk to your capital and it is possible to lose more than your initial investment. These products may not be suitable for all investors. Ensure you understand the risks involved and seek independent advice if and where necessary.

Trading News from Michael Hewson, Analyst, CMC Markets.

CMC Markets is authorised and regulated in the UK by the Financial Services Authority (FSA). FSA Registration no. 173730.

Note that CMC Markets provide an execution-only service. Any CMC Markets research and charting tools are indicative – they are provided for information purposes – they must not be relied upon as investment advice.

The above material should not be construed as a recommendation or offer to buy or offer to sell or solicitation of any offer to buy any security or other financial instrument by CMC Markets. The material is not a recommendation. You should seek independent advice as to a) your suitability to speculate in any related markets b) your ability to assume the associated risks c) the legal, tax and accounting characteristics and consequences of any transaction.

The US dollar has regained some of its lost ground over the past 24 hours, as risk appetite took a knock over concerns that the joint EU/IMF bail-out plan for Greece may end up causing more problems further down the line.

Rising Greek yields have also pulled on the Euro as they hit pre-bailout plan levels of over 7.30% yesterday.

As a result Greece Prime Minister George Papandreou yesterday asked for a meeting with the European Union, the International Monetary Fund and the European Central Bank and these talks are set to begin next week in Athens on April 19.

Rising concern over possible Chinese fiscal tightening in the next couple of weeks has also caused a paring back of risk and this has also benefited the yen which has pushed higher across the board.

Disappointment over yesterday’s US weekly jobless claims has also weighed on risk appetite, after they came in well above expectations at 484k, against an expectation of 440k, while factory production and other economic data came in slightly ahead of expectations, bearing out Fed President Bernanke’s concerns about recovery and the outlook for jobs.

Sterling has continued to be remarkably resilient especially against the Euro as concerns about Greece and other Club Med peripheral countries continue to weigh on the single currency, however it did pare back some of yesterday’s gains against the Euro and dollar after polls from last night’s leader’s debates showed that Liberal Democrat Nick Clegg struck a chord with voters increasing concerns that a “hung” parliament could well be the likely outcome of next months UK elections.

EURUSD – while the Euro is able to hold above the key break-out level at 1.3520 the danger of a move towards the March highs at 1.3800 is a real possibility.

For now there appears to be a short term barrier around this weeks highs around 1.3690, and this needs to break for a move to 1.3800 to happen. A break above 1.3800 could well provoke further short-covering towards 1.4000. A break back below 1.3520 re-targets a move towards 1.3380.

GBPUSD – the pound continues to outperform the Euro against the dollar pushing against the top end of its recent range.

The previous highs around the 1.5350 area are now acting as an area of support. The break above the 50 day moving average has also helped in this regard as the pound looks to test towards the 1.5550/80 area which is a 38.2% retracement of the down move from the November highs at 1.6875 to the lows in March at 1.4780. It is also finding some degree of support at 1.5420 area.

EURGBP – the Euro once again failed to break above the 200 day moving average at 0.8880. While below this key level the Euro will continue to remain vulnerable to further downside pressure. The risk remains for a test towards the February lows at 0.8660 initially.

USDJPY – the yen has continued its range bound behaviour of the past few days, capped around the 93.70/80 area while supported around the 92.60/80 area which remains the key support. A break of 92.60/80 would target 92.30 which would be a 38.2% pullback of the up move from the lows at 88.10 to the peaks this week at 94.78.

The 7 month high this week at 94.78 as well as 95.10, remain key resistance levels and are the barriers to further gains.

CFDs, FX and Spread Trading are leveraged products. They carry a high level of risk to your capital and it is possible to lose more than your initial investment. These products may not be suitable for all investors. Ensure you understand the risks involved and seek independent advice if and where necessary.

Trading News from Michael Hewson, Analyst, CMC Markets.

CMC Markets is authorised and regulated in the UK by the Financial Services Authority (FSA). FSA Registration no. 173730.

Note that CMC Markets provide an execution-only service. Any CMC Markets research and charting tools are indicative – they are provided for information purposes – they must not be relied upon as investment advice.

The above material should not be construed as a recommendation or offer to buy or offer to sell or solicitation of any offer to buy any security or other financial instrument by CMC Markets. The material is not a recommendation. You should seek independent advice as to a) your suitability to speculate in any related markets b) your ability to assume the associated risks c) the legal, tax and accounting characteristics and consequences of any transaction.