03 June 2014, EUR/USD
We do not expect important macroeconomic statistics till the ECB meeting. The reports that are worth noting are the German inflation preliminary data and the production index ISM. With regard to the first report, the index growth rate combined with retail sales falling indicate a inflationary pressures contraction in the Eurozone leading economy. In the light of this we can expect the price drop.
The support levels are 1.3590- 1.3600, and the resistance levels are 1.3650 - 1.3670.
MACD is in negative territory. The histogram is descending.
The ECB's decision on interest rates will be announced this week. We expect the U.S. labor market data publication which can greatly affect the pair dynamics. Prior to these events, we are likely to see trading in a range.
The National Bureau of Statistics revised downward the industrial production growth in the first quarter, indicating a possible negative trend development in this sector of the economy. In the light of this it is difficult to expect the news releases better then the median forecasts which can not support the demand for the British currency.
The rising trendline 1.6800 and the strong support level 1.6750 are broken. That fact weakens the bulls' plans and might keep the pair in a downtrend in a media term.
At the time the British pound corrected upward to the strong resistance level 1.6770. The volumes near the level form a small divergence that can lead to a short-term consolidation in the long term.
The support levels are 1.6700 - 1.6730, and the resistance levels are 1.67700 - 1.6800.
MACD histogram is lowering thus giving a sell signal.
The return to the 1.6700 support and its penetration significantly worsens the pair’s outlook and opens the way to the 65th figure. The pair should consolidate above 1.6830-1.6842 to return to the bullish channel.
The inflation accelerated to 3.2 percent year on year as a result of increasing the sales tax from 5 percent to 8 percent. This is the highest inflation rate over the last 23 years but according to the Bank of Japan sales tax increased the inflation by about 1.7 percent.
Dollar has the potential to be further strengthened against the yen up to about publishing data on employment in the U.S. next week, as long as the flow of statistical data speaks in favor of an early folding Fed asset purchase program and further tightening of monetary policy by raising rates next year.
The support levels: 120.30-102.40, and the resistance levels: 102.70 – 102.80.
The MACD is above the zero line and growing confirming the current growth.
The recovery is still in its infancy and needs to break the resistance 102.30 to feel more confident. The rising above the last level will signal the uptrend resumption.