By FXEmpire.com

Last week saw the Euro fall for another week against the dollar on concerns over Greece and following the downgrade by Moody’s. The Euro remains under pressure from many sides as investors are reluctant to invest in the riskier assets.

Going forward it can be said, that given the recent past for Greece, investors are going to remain skeptical of investing in the Euro ahead of that mid-June election. In a statement “the European Central Bank said it will temporarily stop lending to some Greek banks, with President Mario Draghi indicating it won’t compromise to keep Greece in the euro area. Draghi acknowledged for the first time this week that Greece may exit. While the bank’s “strong preference” is that Greece stays in the bloc, the will continue to preserve “the integrity of our balance ECB sheet”. Such a statement will further add to the woes of Euro.

The contagion effect on Spain is also leaving investors worried. On the economic front the German data is expected to continue its uptick for the coming week as well with its Export and Government Spending expected to rise. The PMI numbers from Germany are also expected to remain on the positive side this would support the Euro during the week. But on the other hand Euro zone economic data is expected to disappoint the market which could leave the Euro remaining a mix bag on the economic front. So for the coming week we can say that Euro would be majorly driven by the political outcome and also if Merkel and other European leaders are able to get some relief from G-8 leaders. It also be said that most of the negative news is out and has been factored in so some support for the Euro could be felt in the next week.

The EUR/USD closed on a negative note for the third consecutive week. Last week, the pair opened lower with a gap down and continued to decline. The EUR/USD tested a low of 1.2640, which is almost near its previous low of 1.2622. In the later part of the week, the pair managed to recover from the lows and finally closed at 1.2782, down 1.02% W/W. If the pair breaks the previous lows of 1.2622, then we can expect it to test further lower levels of 1.2300 and 1.2100 in the coming days. If it manages to sustain above these levels, then a minor pull-back can be expected. However, the overall trend appears to be still bearish. This week, we can expect some pull-back in the pair that will see it test the highs of 1.2950-1.2970 levels. The RSI-14, which is currently trading at 0.33 on the daily charts, is suggesting positive divergence in the pair.

This week, supports are seen at 1.2640 and 1.2620 and resistances are at 1.2810 then 1.2960.

The pound declined for a straight third week against the dollar on renewed concerns of Greek fallout. The country has been suffering because of its over dependence on the European countries for trade. Talking on the economic front as we had mentioned in our previous weekly report that the BOE would sound very “Dovish” in respect to inflation and this would make us believe the bank could offer more monetary stimulus which is negative for the currency. For the coming week the economic data BOE minutes come in on 23 and would be closely watched. Other data coming out of UK remains weak with a rise in CPI to 0.60% from a previous 0.30%. there could be no change seen in the GDP numbers. So for the coming week we could expect the pound to stay lower on economic concerns along with rising Euro concerns.

It has been another bad week for the GBP/USD; the pair was down 1.59% W/W. Last week, the pair opened at 1.606 and started declining to hit a low of 1.5729 on the last day of the week, before finally settling at 1.5815. The pair has given a breakdown of the trend channel and has even breached the 50% retracement level for the upward rally, ranging from 1.5233 to 1.6301. This week, we expect the pair to continue to trade lower, given that even the RSI-14 momentum indicator, currently trading at 0.47 on weekly charts, is continuing its downtrend and signaling the same for the pair. This week, we advise that selling can be initiated on pull-backs. The supports for the week are evident at 1.5770 then 1.5640, which are the 50% and 61.8% retracement levels of the 1.5233-1.6301 range, respectively; the resistances are at 1.5890 then 1.6020.

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Originally posted here