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A quiet start to the week as both JP and United Kingdom have national holidays, greatly limiting investment flows as for the day.
Throughout Asia and early Europe, Euro USD staged a mild retrace rally after last Friday's better than forecast NFPs took the pair below the 1.5500 level in the aftermath of the release.
Today the bounce in the Euro USD was a bit stalled right back at the levels of 1.5500 level as the weaker that expected Sentix investor confidence survey which printed at 3.5 versus forecast of 3.9 put a cap to any upside momentum in the euro. 1.5500 appears to be the level of equilibrium for the time being with euro bulls still hoping for another retest of 1.60 while dollar longs are targeting 1.50 as the key level for the breakdown of the larger uptrend in the pair.
As we noted in our weekly "Having pierced 1.5500 support level this week, after gaining more than 300 points the dollar may find next week a bit slow going. The week of the US economic calendar will not command nearly as much attention, with ISM Services and Trade Balance being the only possible market moving data points.
The most important event this week will likely come from Europe when traders will focus on any change of tone from ECB chief Jean Claude Trichet at his monthly press conference. If Mr. Trichet makes even the slightest casual suggestion of a shift to a neutral stance, The USD may gain further, but if he remains hawkish we could see a rally back to 1.5600 as the week comes to a close.
Still all things being equal, the Euro USD looks far more likely to hit 1.50 other than 1.60 in the future as the market participants will turn their attention to the slowdown in Europe other than the problems in United States"
12:27
Posted on May-05-2008
