EUR/USD, USD/JPY, EUR/GBP flows - eying spread, energy dissipating

Some positives for France, to an extent, as Moody’s retains its Aa3 rating after the close on Friday. That plays to the initial ‘sell the rumour, buy the (non) fact’ and the fast money event trade pullback. On the charts, it’s seen a small gap down on the OAT-bund spread and a re-test of the 160 breakout. That re-test was very likely, technically speaking, anyway, and the gap left behind might want to be filled if support holds up now. Through 160 and hold instead though, and there is a better nearby profit-taking / short covering being felt so a bit more notable in terms of momentum even if not long-term trend. 

Big picture, while the lack of downgrade may mean that some very fixed passive indexers don’t have to sell, for the wider market the market tends to lead the rating agencies anyway and come to its own opinion. The overall direction still seems to be that the underlying trend is escalating pressure until/unless it forces a sufficient crisis response. The weekend did still ongoing protests in both France and Italy and that wider framing still holds. 

EUR/USD left still very trapped at the 1.12 pivot and still losing some energy at that point. 1.1275 is key nearby resistance if the market does manage some cross-over covering interest, while 1.1200/1.1150 congestion is support if a squeeze and bounce fails to materialise.  Bit of stalling and possible nearby bounce also seen on the crosses, as EUR/GBP still finds basing after a fast move ahead of UK Budget and technical support, while EUR/JPY also quietening after last week's extension, with USD/JPY still respecting recent 157~ as support.