Greece still hangs in the balance

Trading activity in GBP/USD and EUR/USD is expected to be muted during today's public holiday in the US.

A pound atop a dollar note
Source: Bloomberg

GBP/USD retains $1.54

There has been consolidation in the $1.5430 region, and the market is not expecting any major swings today as it is Presidents Day in the US.

Sterling made great strides last week to buck the downward trend it has been in against the dollar. We are not expecting any major economic data out of the UK today, but the market is already looking ahead to tomorrow’s CPI report, and the consensus is for a reading of 0.3%.

Mark Carney has already warned that the UK could encounter deflation in the near-term, and he would cut rates if necessary. If the report misses estimates it will put pressure on the pound.

GBP/USD is receiving support at $1.54 and if this level is held it will make $1.55 the initial target. Beyond that traders will look to the 100-day moving average of $1.5524. A move below $1.54 will turn the level into resistance and support will be found in the $1.5340 region; If that mark is punctured $1.53 will be in sight.

Greece looms over euro

EUR/USD is relatively strong when you consider the situation in Greece is still hanging over the market. The indebted nation is still nowhere near reaching an agreement with the European Central Bank over its financing, and this week the country faces a deadline over whether its banks will receive emergency funding. Greek banks are dependent on receiving emergency funding from the ECB, and the central bank will hold a vote on Wednesday to determine if the funding will be made available.

As I stated previously, Greece has faced many crisis talks in the past and a deal has always been hammered out. This confidence has led to EUR/USD moving off its lows for the year. While the Greek debt talks continue we will not see any major upward moves, but there will be cautious buying.

EUR/USD is receiving support at $1.14 and if this metric is held the upside resistance at $1.15 will be the target. If $1.14 is punctured the initial downside target will be the 200-hour moving average of $1.1370, and the next level of support will be found in the $1.1340 region.

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