27 May 2014, EUR/USD
During the day, the euro/dollar can stay in the lateral trend within the range 1.3600 - 1.3650.
There will not be not much news that may influence the market, maybe the market will pay attention to the Eurozone economy sentiment European Commission report which is expected with improvement and the German employment data that is traditionally good. This information supports the euro, still the German April retail sales may upset the market. The data is expected with a decrease by 0.4% m/m after an unconvincing growth in March, +0.1% m/m.
The growth efforts towards 1.3700-1.3720 can be seen as an opportunity to open short positions. The growth and ability to consolidate above will puzzle "bears" for the pair.
The news flow is very poor this week - Tuesday will show the mortgage approvals number for April. Tomorrow we expect the Confederation of British Industry (CBI) progress report on retail sales in May which is likely to rise to the indicator 35 against 30, and on Thursday we expect the consumer confidence index for May GfK at -2 after -3. In fact it is the whole Britain news package this week. As can be seen, there is not any provoking activity information capable to drive this instrument and probably sterling will be influenced by the external events.
Given the oversold signs absence it seems quite possible to break through the current support. In this case, we should expect the testing 1.6731 low. The level break will increase a downward pressure. To weaken it the pound need to overcome the 69th figure.
This week the main data packet will be presented at the end of the month. We expect interesting results about the April consumer price index – the forecast suggests that the growth was 3.4 % y/y vs. 1.6 % y/y. This can put pressure on the yen, if the forecast is confirmed it will signalize the tapering programs expansion low probability in the near future.
The break through and the ability to consolidate above 101.59-101.80 is a positive factor for the dollar. However, while the U.S. currency is trading below 102.00-102.36, the risks of renewed decrease will continue. The growth above the latter may mean a return to the uptrend channel.