The Euro was underpinned today after Greece unveiled further measures to rein in its budget deficit and convince the markets it is serious about tackling its debt crisis.

The cuts include an immediate pension freeze, wage cuts of up to 12% in the public sector and higher VAT to 21% are intended to save €4.8bn. Yesterday, Greek Prime Minister Papandreou compared his country's fiscal crisis to a 'war' and warned harsh and possibly unfair measures were on the way. Today, Papandreou said Greece had done enough to satisfy its critics ahead of his Friday meeting with Angela Merkel.

The pound has regained some ground today ahead of tomorrow's Monetary Policy Committee meeting, however the declines of the last week or so have most certainly removed the room for manoeuvre of the committee with respect to any further quantitative easing. The most likely scenario will be the continuation of do nothing, and wait and see.

EURUSD - the Euro has today stabilised after the announcement of today's austerity package. The focus of attention now shifts towards the Friday meeting of Merkel and the Greek Prime Minister. However agreeing measures is one thing, being allowed to implement them is a different scenario altogether. The overall scenario of a lower Euro remains the key drag on any rallies, with resistance also at 1.3780, though the risk of a move towards 1.3900 trend line resistance from the 1.5145 highs has increased slightly, with the break above 1.3700.

GBPUSD - The key level on a daily close remains 1.4850 which is the 61.8% Fibonacci Retracement of the up move from 1.3500 to 1.7045. A break below here would re-target 1.4400, the 22nd April 2009 lows.
The pound has so far been able to sustain itself above the 1.4980/1.5020 area and could now be susceptible to a rally towards the 1.5270 resistance area.

EURGBP - the November and December 2009 highs at 0.9150 are the key barriers to further Euro upside here. This week's rally stalled at this level and remains the key barrier to further sterling losses. Euro dips should some buyers around 0.8980 and 0.9020.

USDJPY - we continue to see the yen range between the 2 week lows around 88.50 and the highs around 89.50. The target remains for a drift towards and below 88.25 while below cloud resistance at 89.30.

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