European leaders are trying their best to salvage a dire situation and over the week end there was further back slapping for the Greek prime minister from the French president.  All the right noises are coming out of the euro zone, but the underlying risks still remain.  Greece’s credit rating has been downgraded several times and the cost of its borrowing has rocketed.  If the proposals it has recommended for cutting its budget deficit are not put into action soon then a default becomes more and more likely.

For now the euro has found some support, but bears will be waiting in the wings for the next catastrophe to unfold.  France and Germany are of course reluctant to say that they will rescue the Greeks if needed as others will surly follow and the costs will be unquantifiable.

Just a little bit of tentativeness this morning as the FTSE breaks through to new ground but is unable to surge ahead.  We’ve recorded a 15 month high this morning courtesy of a strong end to the week by US markets on Friday.

The FTSE is currently above the 5600 level with the next resistance levels in site.  5650 was the last level we saw resistance in the FTSE 100 just before the collapse of Lehman Brothers so this could be a difficult hurdle to overcome once again.  We have to build sufficient support around the 5600 level first as we around the level that was followed by the sharp correction in January so the bulls are just sitting on their hands for the time being.  A second failure around these levels will form a “double top” which is often a bearish signal.

With other US and European indices still lagging below their January highs, for the FTSE to maintain its strength, these other indices will have to push on a little and test resistance levels.  Otherwise a double top in the FTSE and a lower high in other indices will cast doubt over the rally and whether the bullish momentum since last March is well and truly over.

Things are very quiet on the economic data front today with only German industrial production later this morning, which is expected to show a rise into positive territory for the first time since September 2008.  There is little fat to chew on for the rest of the week too, but on Friday there US retail sales and University of Michigan confidence numbers that should provide food for thought.

Currency markets are leaning against the dollar this morning with EUR/USD heading back towards 1.37 and cable back towards 1.52.

Gold is hovering round the 1135 as it has done for the past few days.  Its movement has been muted since Friday’s NFP, after initially dipping sharply straight after the release only to reverse its losses.  1145 remains the resistance for gold and if we make it beyond there bulls will be targeting January’s high of 1162.

Crude is putting on the best gains today testing renewed highs just this morning around $82.30.  This seems to be a follow through from Friday’s better than expected non-farm payroll.  Now we really aren’t far off January’s highs pegged in around 83.90 and beyond there we’re into levels not seen since the back end of 2008.  The danger for bulls is that demand doesn’t pick up.  There is still so much oil sloshing around above ground, more than enough to meet current demand levels, so any downward revisions to growth could lead to an explosive move to the downside.