EUROPEAN session review: Euro fell

Data released: 

06:00 GMT Germany Wholesale Price Index (YoY) (Apr) -1.3% -1.5% -1.7% 

06:00 GMT Germany Wholesale Price Index (MoM) (Apr) 0.2% 0.0% 0.0% 

09:00 GMT Germany ZEW Survey - Economic Sentiment (May) 33.1 41.0 43.2 

09:00 GMT Germany ZEW Survey - Current Situation (May) 62.1 60.5 59.5 

09:00 GMT EMU ZEW Survey - Economic Sentiment (May) 55.2 63.5 61.2 

The euro is in market’s focus during european trade. Comments from ECB's Constancio and Nowotny were the highlight of a very quiet start to the week yesterday. Both took a small step back from Draghi's comments on Thursday, saying it is too early to speculate on June action from the ECB. 

This puts greater emphasis on the data coming out of Europe later this month, although as Draghi stated during the press conference a key influence on their policy decision will be the ECB staff forecasts and bank lending data due in June. A final point worth noting is that Nowotny also hinted that a package of measures could be considered, with his own view being that a rate cut on its own would be insufficient. 

EURO 

The euro fell after the German data. The Economic sentiment index showed downward moves from last December when it posted multi-year high at 62. And this time the market expected to see another decrease from 43.2 in April to 41.3. However, the data came out at depressing 33.1. 

Bundesbank’s message added to pressure on euro. Bundesbank open to significant ECB stimulus in June if 2016 inflation forecasts lowered. 

EUR/USD fell as low as $1.3700. Below support comes at $1.3670 (Apr 4 lows). Initial resistance comes at $1.3800 (23.6% Fibo of the recent fall), then - at $1.3840 (38.2%) and $1.3870 (50%). 

POUND 

The pound stays under pressure. 

Yesterday the CBI said it had increased its forecast for U.K. growth this year to 3%, from 2.6% previously. The Organisation for Economic Cooperation and Development and the National Institute of Economic and Social Research both raised their 2014 predictions last week, to 3.2% and 2.9%, respectively. 

GBP/USD currently holds at $1.6840. Initial resistance is around $1.6900/10 (50% Fibo of the recent decline). Below $1.6830/20 support comes at $1.6780 with a break under widens losses to $1.6700 and around Apr 15 lows on $1.6660. 

YEN 

The yen fell amid speculation Japan’s economy is trailing behind its counterparts and the central bank will need to add more stimulus. 

USD/JPY holds near Y102.30. Further resisatance is around Y102.75 and Y103.40. Stronger one remains at Y104.30/80. Below Y102.00 support comes at Y101.30 (Apr 10 lows) and Y100.70 (Feb 7 lows). 

DATA AHEAD 

At 12:30 GMT US data include Apr Import/Export Price Index and Apr Retail Sales (median 0.4% vs 1.1%). 

At 14:00 GMT US Mar Business Inventories come.

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