FOREX TECHNICAL ANALYSIS: MAJOR SUPPORT LEVELS THREATENED. WHAT WILL BE THE ANSWER OF THE BULLS?
EUR/USDForex Technical Analysis: The week that just ended was mainly characterized by Euro weakness generated by speculation that ECB will implement more measures to improve the current economic situation. Although the measures weren�t specified, a rate cut in June is at the top of the list.
Technical OutlookThe break of the long term uptrend line generated additional bearish impulse and took price into 1.3700 support. Although price moved briefly below this level, a clear break didn�t occur and at the moment we are seeing signs of rejection but momentum favors the bears; if we are going to see a break, price will most likely move upwards before going through the level at 1.3700. If during the week we will see another failed attempt to break support, it will be a sign that bears don�t have enough steam left and that higher prices will follow.
Fundamental OutlookGerman Bundesbank President Jens Weidmann will speak Monday at a Symposium in Frankfurt and this will be the day�s only notable event but volatility will mostly depend on the matters discussed and his attitude. Wednesday the Fed will release the Minutes of the latest FOMC Meeting, explaining the reasons that stood behind their latest vote regarding the interest rate. The strength of the movement created by this release varies but if hints about future monetary policy are offered, its importance will increase.
Thursday France and Germany announce their Manufacturing PMIs, which are leading indicators of economic health and of optimism among purchasing managers, with the ability to strengthen the single currency if an increase is posted. The same day the US Existing Home Sales come out, offering insights into the American housing market. Additional information about the housing situation will be offered Friday by the US New Home Sales numbers while the Euro will be influenced by the release of the German Ifo Business Climate, a survey based on the opinions of about 7,000 businesses and focused on current economic conditions and 6-month outlook.
GBP/USDLast week BoE Governor Mark Carney suggested that a rate increase is not the next thing on their agenda and that more time may pass until the central bank will consider a rate hike. Some market participants were disappointed by the Governor�s stance and lost interest for the Pound, generating a bearish week.
Technical OutlookFrom a long term perspective the pair is in an uptrend and the Pound has been one of the best performers this year, but the short term momentum belongs to the sellers and a top seems to be established at 1.6996. If this week price will manage to break the uptrend line drawn from November last year, the uptrend will be severely weakened and the next target will be the support at 1.6600. The level of 1.6750 and the uptrend line create a confluence zone around the point where they intersect and the bears will have trouble breaking it, but if they succeed they will tip the medium term balance in their favor.
Fundamental OutlookUnited Kingdom�s Consumer Price Index will be Tuesday�s main event but British inflation is not a concerning issue at the moment so the impact of the release may be milder than usual. Wednesday the Bank of England will make public the votes on the latest interest rate decision, a good opportunity for traders to assess the MPC members� stance regarding a future rate increase. Retail Sales are announced the same day and the last major indicator for the Pound will be released Thursday in the form of the British Gross Domestic Product. Without a doubt, the pair�s movement will be affected throughout the week by the US events mentioned above.
