Euro Holds Most Of Relief Rally

* US Q4 GDP revised lower to 5.6% from 5.9%
* University of Michigan consumer sentiment steady at 73.6 in March from Feb
* Merkel: Europe isn’t in the position to solve such a problem on its own
* Greek central banker: Will not need to use aid
* ECB’s Bini-Smaghi: EU/IMF plan not ideal solution
* IMF: Always ready to consider members’ requests for aid
* S&P affirms Portugal’s A+ rating
* South Korean Naval ship sinks near border; early reports of N Korean attack downplayed
* IMM specs short a record 75,000 EUR contracts
* US equities close virtually unchanged
* US yields ease slightly; 2-year note 1.06; 10-year note 3.85%

EUR/USD closed at its highs Friday afternoon, around 1.3423, underpinned late in the day by news that speculators are short a record number of EUR contracts on the IMM. Narrower Greek yield spreads over Germ,an bunds helped as well as Trichet muted his earlier criticism of IMF participation in the Greece safety net.


Central bank offers are seen at the 1.3430 area, just below the 1.3435/45 level which defined the base of the range for nearly a month. Large stop-loss buy orders are clustered around the 1.3465 level.

USD/JPY took a breather in US trade, consolidating recent gains after stalling below 93.00. Heavy offers are seen at the 93.00 level and again toward 93.50. US funds remain buyers on dips to the 92.30/40 region.

AUD/USD was pressured by profit-taking today with many macro accounts selling long AUD. covering short EUR positions. AUD/USD fell to 0.9002, holding above the 0.8994 level which is the 38.2% retracement of the 0.8575/0.9250 rally.