US data and Bernanke the focus this week

EUR/USD
Range: 1.2223-1.2270
Support: 1.2150
Resistance: 1.2325

A short market was caught on the back foot on Friday afternoon with a large Central Bank redemption flow pushing the single currency back onto a 1.2200 handle. This week’s main event for the Euro will be the Eurogroup meeting on Friday where the Euro area finance ministers will meet to finalise and sign the Memorandum of Understanding with Spain. Once this has been signed, the EFSF is expected to make available Euro 300 billion by the end of July. I’m expecting pressure to build on the 1.2150 barrier as we remain in a sell rallies mode bar any ground breaking news.

GBP/USD
Range: 1.5563 – 1.5592
Support: 1.5850
Resistance: 1.6050

Cable caught a bid tone in thin trading conditions on Friday with general USD weakness after a week of continued strength. EUR/GBP remains under pressure in a sell rallies environment as we consolidate below 0.7900. This week see’s a raft of top tier data from the UK starting tomorrow with June CPI expected to show a slight decline to 2.7%. The MPC on Wednesday should show the committee voted unanimously to increase QE to £375 billion. UK jobs data and retail sales are released towards the end of the week.

USD/JPY
Range: 78.98-79.27
Support: 78.80
Resistance: 79.80

The JPY strengthens in subdued trading with Japan celebrating a public holiday. Pressure builds as we trade towards the 78.80 level ahead of a week of US data. Focus this week will be on Bernanke’s double appearance, as some in the market are still clinging to hopes for more easing from the Fed. He will first testify before the Senate Banking Committee on Tuesday on his economic and monetary policy outlook before a testimony in front of the House Financial Services Committee on Wednesday. Markets will clearly be watching closely for any discussion around policy options and possible hints of further accommodation given recent data disappointments.