The Euro has found a degree of support over the last 24 hours 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. The Greek Prime Minister Papandreou compared his country's fiscal crisis to a 'war' and warned harsh and possibly unfair measures were on the way.
Yesterday, Papandreou said Greece had done enough to satisfy its critics ahead of his Friday meeting with Angela Merkel and went on to urge Europe to offer financial guarantees and went on to hint if they were not forthcoming Greece could turn to the IMF.
Merkel was quick to dampen any hopes of guarantees saying that Friday's summit would not be about aid commitments. Greek public sector unions reacted with predictable indignation and are expected to demonstrate against the proposed cuts in Athens today.
However for all the relief about the budget Greece still has the thorny problem of funding up to €20bn worth of debt roll-overs in April and May.
Meanwhile the European Central Bank meets today and is expected to keep European interest rates at 1% due to the recent slide back in growth across the Euro zone. In any case the parlous state of the peripheral Euro zone countries will likely hamper the ECB's room for manoeuvre on both rates and stimulus for the foreseeable future, as they continue to remain a drag on Europe in general.

The pound has regained some ground over the past 24 hours ahead of today's Monetary Policy Committee meeting; after quite positive services PMI data for January showed a jump to its highest level since January 2007, and the biggest one month gain in 10 years to 58.4. Economists had expected a gain but only to 55. This positive data along with the declines of the last week or so have most certainly removed the likelihood of the committee considering any further quantitative easing for the time being. The most likely scenario will be the continuation of do nothing, and wait and see.

US figures out today include weekly jobless which may offer further clues about tomorrows employment report, indeed yesterday's ADP employment number offered the hope that tomorrow's figure could surprise on the upside, though there may be a revision lower of the January figure.

EURUSD - the Euro has stabilised over the past 24 hours after the announcement of yesterday'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 1.3890 trend line resistance from the 1.5145 highs has increased slightly, with the squeeze above 1.3700 over the past day. On the downside the key level remains 1.3485 on a daily close.

GBPUSD - 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, after breaking back above 1.5000. 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.

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 find some buyers around 0.8980 and 0.9020.

USDJPY - the yen continues to benefit at the dollar's expense having hit the 88.25 level, and 61.8% retracement of the up move from 84.80 to 93.75 overnight. This area around the 88.15/25 area needs to hold, or the risk of a further drift lower towards 87.70 remains the risk.

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