The Euro staged a significant rally yesterday on speculation that Greece has started to make the right moves towards receiving its next bailout package. This increased demand for the single currency and alleviated some fears of Greece leaving the single currency. Despite protests outside the Greek parliament yesterday by union members and a 24 hour strike and the burning of a German flag it looks very likely that Greece will have to bite the bullet and enforce harsh austerity measures to secure their next bailout package.

The market is reacting very quickly to short term news without looking at the bigger picture at the moment which leads me to believe that the recent rallies that we have seen in the Euro may be short lived and upside potential in the single currency is now looking very limited. I wouldn’t expect it to be too long now before additional negative news filters in from the Eurozone sparking an additional round of selling of the single currency dropping it in value once again as we saw in January.

The Japanese Yen also weakened sharply yesterday after its current account surplus diminished by 44% from the previous year to 9.63 trillion Yen. The narrowing surplus is seen as a signal to structural change in Japan’s eternal trade and will also act as a short term catalyst to sell Yen.