The EUR/USD finished slightly better to flat on Tuesday as traders pared positions ahead of today’s meeting to decide the fate of Greece’s bailout funding. With this meeting being an event risk for the Euro, many traders have decided to head to the sidelines. Technically, the main trend is down on the daily chart, but the EUR/USD is trying to form a support base. The dominant resistance remains a pair of 50% price levels at 1.2818 and 1.2840. Even a move through this level will not change the trend to up, but is likely to encourage a few of the weaker shorts to exit their positions. Besides Greece, a downgrade of France’s debt rating pressured the Euro slightly against most majors. This was another sign that even a major economy like France is not immune to the sovereign debt crisis. Some light profit-taking selling pressure put a lid on the GBP/USD on Tuesday after the previous day’s solid rally. Like the Euro, the main trend is down against the dollar so the current three-day rally is being attributed to short-taking. Underpinning the Forex pair is optimism that the U.S. will reach an agreement on avoiding the so-called “fiscal cliff�. This is creating some demand for higher risk assets. News that Greece will receive its bailout funds is likely to support the Sterling. Technically, the GBP/USD has plenty of room to the upside. The charts show that 1.6006 is a potential near-term target although it remains vulnerable to a break to 1.5881. Light profit-taking contributed to a weaker trade in December Gold. Short-term overbought conditions may be the main reason for the profit-taking following Monday’s strong rally. Higher equity markets and a weaker dollar could give gold a boost later in the session. Technically, gold is challenging a major 50% level at $1735.50. This price level is slightly below the last main top at $1739.40. A sustained move through this price will reaffirm the current uptrend and could drive the market into the Fibonacci level at $1750.12. On the downside, a trade through $1704.50 will turn the main trend to down. January Crude Oil traded slightly lower as speculators decided to take profits after Monday’s surge. With peace talks going on between Hamas and Israel, speculators are factoring in the possibility of a cease fire. The driving force behind the short-covering and speculative rally remains the possibility of a disruption in supply. As long as supply is not being directly affected, traders may not be willing to chase the market higher at current levels. This could mean a return to the rangebound conditions we’ve been seeing the past two weeks. Further upside activity could trigger a rally into $92.86 over the near-term.

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