EUROPEAN session review: Euro dropped again

Data released (actual, consensus, previous):                 

06:45    FR    Budget (May)    €-72.6B        €-66.8B         

07:15    CH    Real Retail Sales (YoY) (May)    1.8%    1.9%    3.1% 

08:30    UK Industrial Production (m/m) (May)     0     0.2     -0.1          

08:30    UK Industrial Production (y/y) (May)     -2.9     -1.6     -0.9          

08:30    UK Trade Balance (m/m) (May)     -8.491     -8.47     -8.224

The euro dropped again waiting for results of European Union finance ministers meeting in Brussels, a day after agreeing to release 3 billion euros ($3.9 billion) of aid for Greece. 

Before the dollar weakened against most of its major peers as Federal Reserve Chairman Ben S. Bernanke prepares to speak tomorrow amid speculation he will provide further guidance on plans to scale back asset purchases. By the way, EUR/USD will get back to 1.30 if Ben Bernanke is as dovish as everyone expects.

EURO:

In light of the recent statement by the ECB and yesterday’s speech by President Draghi, the fact that any tightening in policy is very distant means that interest rates will stay low for a very long time. The market is taking this new communication policy from the ECB as a green light to sell the EUR. 

EUR/USD reached resistance near $1.2880, recovering from $1.2800 lows (Friday’s and May 17 lows) with a break below widens losses to $1.2745 (Apr 24 lows) and $1.2660 (Dec 13’2012 lows). Initial resistance is near $1. 2880/90 (Friday’s hourly high), then - at $1.3030 (high Jul.3) and $1.3080 (high Jul.2).

POUND:

The pound dropped after weaker then expected data. Industrial production showed zero growth in May despite of forecasts 0.2% increasing. Also data showed wider then it was expected Trade balance deficit. 

GBP/USD holds a bit above recent lows near $1.4850 (initial support). Below support comes at $1.4820 (Mar 12 lows) and $1.4780 (Feb 28’2010 lows). Initial resistance is near $1.5020 (Friday’s Asia higihs), then - at $1.5130 (Jul 3 lows).

YEN:

remain under pressure amid an optimism Prime Minister Shinzo Abe will push through economic reforms after winning upper house elections on July 21. 

USD/JPY holds below recent highs on Y101.50 - currently at Y101.20. Support comes at Y99.90 (Friday’s low) and Y99.50 (Jul 4 low). Resistance is around Y102.20 (channel line from Jun 14), then - at Y103.70 (May 22 high).

DATA AHEAD:

At 12:15 GMT Canada is schedule to report Jun Housing Starts. 

At 23:50 GMT Japan May Tertiary Industry Index comes.

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