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Hello Koalas!

Hope you are having a great weekend so far.

For starters, lets take stock of the current situation.

I mentioned in the previous weekly review that we will probably be ranging between 1.34 � 1.38. Looking with hindsight, the price action pretty much respected this range well.

At the start of the week, risk aversion was evident. There were reports stating that Germany did not factor in Greece�s aid in the 2010 budget. This apparently spooked investors who were paying close attention to the Greek deficit crisis. Later on however, EU officials commented that they expected Greece to introduce more deficit cutting measures. While this was encouraging, we must remember that the underlying problems go beyond a mere solution. This was seen as the price action became bullish in midweek due to the passing of deficit cutting measures by the Greek government, only to be knocked back down when strikes broke out. The Greek people were not happy that they were made to pay for the action of others. This indeed goes beyond a simple fix.

I noticed there was increasing reference to Britain as being the next Euro country to be implicated by deficit problems. This puts Britain in the category of Spain and Portugal. Possible hot zones. Close monitoring is advised.

US gave us a surprise this week. While economic data was generally good throughout the week, spurring on the ascent of the S&P 500, the US Pending Home Sales fell sharply in the later half of the week. Home sales are crucial to an economy as they can stimulate business. Surprising, the S&P 500 remains unaffected. This suggests positive sentiments towards the US economy. Having said so. do remember that the financial crisis is still pretty much around. Unemployment rate in the US remains a problem. The US deficit is massive too.

Next week brings us more economic data from both sides of the Atlantic. Releases such as the German Industrial Production will probably shed some light on the current economy�s status. Towards the end of the week, we have a few important data from the US. Examples include the US Unemployment Claims and Retail Sales.

You can find more information on economic data in the Economic Calender below.

From a technical point of view, we have being ranging for sometime now. This is not a surprise as the market simply do not have the best of choices. A better or worst than expected economic data from either side will probably woo or turn investors away.

The 200 EMA turns bearish but do consider the point that we are at the strong line of 1.3600 and hence any bearish push may see the currency pair moving back to 1.3600 when the momentum quietens.

Much will depend on the developments of the Greek crisis and the various economic data. If there is no adverse incident, we may see the currency pair ranging within 1.34 � 1.38.

Trade safely.

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