EUROPEAN session review: Euro remains under pressure

Data released (actual, consensus, previous):            

07:15   Switzerland Consumer Price Index (YoY) (Jun)     -0.1%    -0.4%    -0.5% 

10:00   Germany Factory Orders (m/m) (May)  -1,3%    1,2%   -2,2%

The greenback rose toward its strongest in more than a month against the yen and euro amid bets an improving U.S. economy will prompt the Federal Reserve to curb stimulus. The euro and pound slid after European Central Bank President Mario Draghi and Bank of England Governor Mark Carney signaled yesterday they will keep borrowing costs at record lows. 

The Dollar Index climbed to a five-week high before a U.S. report today that economists said will show companies added enough jobs to lower the unemployment rate, boosting growth prospects for the world’s biggest economy. The US jobs report release for June will be a closely followed event, in the light of the Federal Reserve officials' hints at the possibility of QE tapering sometime this year. The consensus expectation however is for moderate growth of around 170K, which should not induce the Fed to change policy.

EURO:

According to data released today by the Deutsche Bundesbank, on an annual basis German Factory Orders n.s.a. fell 2% in May, down from the 0.3% drop in April. 

Month-over-month German Factory Orders decreased 1.3% in May, up from the 2.2% decline registered the previous month. Analysts expected 1.2% growth. 

EUR/USD  under $1.2900. The common  currency dropped the most in almost three weeks versus the yen as Draghi said the ECB’s monetary policy stance will “remain accommodative” for as long as needed to spur growth. 

At the moment the pair is near $1.2890 facing the next support at $1.2860 (weekly cloud top) followed by may lows $1.2820.  On the flip side, a break above $1.3030 (high Jul.3) would target $1.3055 (MA100d) en route to $1.3078 (high Jul.2).

POUND:

The bearishness surrounding the sterling is sharpening on Friday, with the GBP/USD tested 3-month lows around 1.4960. The pair is falling for the third consecutive week after failing to follow through the area of 1.5750 twice during June. Regarding yesterday’s BoE’s statement, experts said the statement allowed the market to continue with trading the view that the MPC under Mark Carney will be more aggressive. 

GBP/USD Next support is at 1.4970 (low Jul.5) followed by 1.4915 (low Mar.14) and finally 1.4892 (low Mar.13). A breakout of 1.5238 (MA10d) would target 1.5305 (high Jul.3) and then 1.5346 (high Jun.27).

YEN:

The yen extend losses versus the dollar. 

USD/JPY holds a bit above Y100 with resistance remains at Y100.45/50. Break above will target Y101.20.  Initial support is around daily lows on Y99.20. Below Y98.80 support comes at Y97.20, with a break under targets last Friday’s lows near Y96.90.

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