ForexLive European Morning Wrap – More Rhetoric in Quiet Trading as Traders Await Cypriot Bail-Out Vote

The forex trading headlines for the european morning session Fitch places Cyprus banks on negative watch Cyprus president says that bail-out unlikely to be approved by parliament Draft bail-out levy plans for cypriot depositors range from 20k-500k+ French fin min says eurozone can not lend cyprus any more than current deal BOJ outgoing governor says its dangerous to think that central banks can control market moves with words ECB president Draghi says financial integration is essential to make europe stronger Italian industrial output m/m +0.8% vs -0.3% expected UK CPI  m/m +0.7% vs +0.7% exp UK RPI m/m +0.7% vs +0.8% exp UK PPI input + 3.2% vs +1.9 exp Spanish bond auction euro 4.1 bln vs target 3-4bln. yields lower German march ZEW +48.5 vs +48 exp.. current conditions +13.6 vs +6 exp IMF 's Lagarde says troubled banks need to be recapitalized or wound down Another session full of rhetoric but little of substance as Cyprus continues to dominate. EURUSD has traded in a tight range meeting good demand below 1.2920 after decent German ZEW data but failing to get through session highs of 1.2970. The earlier decline in the pair was down to a gentle sell off in EURJPY which also capped USDJPY at 95.74 and brought both pairs down to 1234.14 and 95.25 respectively. Early GBP weakness saw cable test strong support lines around 1.5070 and EURGBP up to highs of 0.8587 but stronger than expect UK PP data saw the pound jump higher and we've stayed under-pinned since capping on cable at 1.5136 and EURGBP finding technical support at 0.8550 in what has been a very lack-lustre morning. But the concerns for the UK's inherent inflation dilemma remain and this will influence any inflation-related rise. The Cypriot parliament are due to meet at 16.00 gmt to discuss the bail-out plan and revised levy, with the president earlier suggesting that the plans are unlikely to be approved. But we've seen little reaction to this proposed uncertainty apart from merely limiting any small euro gains. It just goes to show that traders remain rightly cautious and that pre-empting any move at this time is a little pointless. The calm before the storm perhaps.