The big ranges on stock markets that we saw throughout January continued yesterday on the first trading day of February as recovering oil prices appear to have raised hopes that we may well have seen a short term base after the declines of the last seven months. This recovery off a two week low saw US stocks finish the first trading day of February in a fairly strong fashion, despite some fairly lacklustre economic data had initially sent markets lower on the open, before a late rally in the last hour of trading, saw US stocks erase most of Friday’s losses. Last night’s positive finish may well have also been helped by the announcement of some encouraging proposals from Greek finance minister Varoufakis about the prospect of some form of debt swap with bonds linked to economic growth, has soothed fears that the new Greek government was intent on provoking a confrontation with its European partners, with a view to exiting the euro. While the initial proposals could well run into obstacles with respect to EU rules about monetary financing the fact that a new approach is being tried has to be welcome given how much of a disaster the current bailout program has been. The key question now is whether EU leaders and in particular the ones in Berlin, as well as the ECB are prepared to give the new proposals a decent hearing over the next few weeks as the proposals are fleshed out, or whether they get dismissed. As a result of last night’s late US rally we can expect to see a positive open here in Europe, with the main focus likely to be on the latest UK construction PMI data for January, after a fairly positive manufacturing number yesterday. The construction index has been one of the notable outperformers in recent months but this has started to show signs of slowing down in the over the last quarter, after a string of strong readings above 60 in 2014. Even allowing for that we can still expect to see a reading of 56.9, down from 57.6. Also in focus the latest Spanish unemployment numbers are expected to show an increase of 83k in January, up from the 64k decline seen in December, highlighting once again how fragile the current Spanish recovery still is, despite recent robust GDP and manufacturing data. EURUSD – having managed to close above the 1.1205 level the risk remains for a rebound back through 1.1400 towards 1.1530. To make further gains we need to break above the trend line resistance from the December highs. We need to see a monthly close below 1.1205, to suggest a further decline towards 1.0500. GBPUSD – the lack of any rebound remains a worry despite continuing to hold above the 1.5000 level. While above the 1.5000 level we can’t rule out a rebound back towards 1.5400, via resistance at 1.5280, but there is a concern that the pound could be on the verge of another trip lower. For a move towards 1.4810 to unfold we would need to see a close below the 1.5000 level. EURGBP – the rebound off last week’s low at 0.7400 seems to be gaining traction, and has support at 0.7460 for the moment. The key level on the top side still sits up at the 0.7590 area, as well as the high last week at 0.7536. Only a move below 0.7400 suggests a move towards 0.7255, which had originally been the peaks seen in 2003. USDJPY – continues to trade in a broad range between 117.00 and 119.00, despite a brief dip to 116.55 yesterday, and while we could see a retest of the 120.00 level, we could equally retest the recent lows. The key support remains just above the 115.60 level which is also potential neckline support for a forming head and shoulders pattern. A break of 115.60 could well see a sharp fall towards 110.00. CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.