FOREX TECHNICAL ANALYSIS: SLOW ECONOMIC WEEK AHEAD. FOCUS SHIFTS TOWARDS THE TECHNICAL FACTORSEUR/USD
Forex Technical Analysis: Speculation about a potential ECB interest rate cut in June continued last week, affecting the pairís direction and generating a good break of 1.3700. Disappointing economic data for the Euro Zone also contributed to the bearish behavior.Technical Outlook
The bears continued their ďassaultĒ on support levels and 1.3700 was broken in the process, solidifying their control. Although the trend seems to be reversing, the Relative Strength Index on a Daily Chart is showing an oversold condition, a fact which makes us believe that bullish moves will occur in the first part of the week. If this comes true, 1.3700 will most likely serve as resistance which will push the pair lower once it is touched.Fundamental Outlook
Monday US Banks will be closed in celebration of Memorial Day so there will be no US economic releases but ECB President Mario Draghi will deliver a speech at the European Central Bank Forum, in Portugal. As always his speeches can create a lot of sharp moves, especially if he will offer hints about ECBís next move regarding monetary policy.
Tuesday the US Consumer Confidence is released; this is a leading indicator of consumer spending and it is based on a large sample of about 5,000 households. Wednesday we have a rather slow day in terms of economic releases and Thursday French and German Banks are closed in observance of Ascension Day. The main event for the US Dollar will be the release of the US Preliminary Gross Domestic Product which can strengthen the greenback if it shows an increase since this is the main measurement of an economyís overall performance. Friday is again a slow day, with the only notable release being the German Retail Sales which usually move the market strongly if a hefty difference between analystsí expectations and actual numbers is posted.GBP/USD
The British economy showed signs of continued improvement and last week we saw an increase in CPI and a better than expected value of the UK Retail Sales. These factors facilitated a climb into 1.6920 but resistance proved too strong and price bounced lower.Technical Outlook
The resistance at 1.6920 was touched twice last week and itís pretty clear that for the time being it cannot be broken. This week we expect another attempt to break the uptrend line drawn from last November and a potential test of 1.6750 support. From a medium term perspective, this level is very important and a clean break would imply that bears are starting to shift momentum in their favor.Fundamental Outlook
For the entire week ahead, economic data will be scarce for the Pound: Monday UK Banks are closed, celebrating Spring Bank Holiday and the only notable event will be the release of the British Bankersí Association Mortgage Approvals, scheduled Tuesday. This is a leading indicator of house demand because usually houses are purchased with the help of a mortgage. Throughout the week, the pair will be also affected by the US events already mentioned.