Euro made new month highs at the height of the Equity rally before slumping hard into the close to make a new daily low. EU Current Account at -13Bn vs. -9.2Bn previous. The outlook is mixed with the topside failure leading some analyst to call for a test of 1.4000 supports before attempting to test the year highs of 1.4338 again. Looking ahead, July German IFO forecast at 86.5 vs. 85.9 previously. Also Released EU PMI Services are forecast at 45.1 vs. 44.7 previously. Japanese Yen was sold aggressively for most of the day as the USD gained the upper hand with the break above 9000 on the DOW and the break above 95 Yen. The pair is looking very strong after the failure on the downside at 93.20 and the improving investor sentiment likely to help crosses rally. Sterling broke above 1.6500 and was volatile above as USD strength and lingering UK fears kept price action mixed. GBP/JPY supported in Asia and EUR/GBP selling during the rest of the day. UK June Retail Sales at 1.2% were much stronger than expectations of 0.4%. Looking ahead, Preliminary GDP Q2 forecast at -0.3% vs. -2.4%
Technical Outlook:
EURO bulls were capped at 1.4291 levels .Currency is expected to have a trading range of 1.4050-1.4260 levels .Good support is seen at 1.4020 levels. Stochastic and momentum indicators are pointing up and relative market strength is also bullish indicating small upward correction before a fall. Key resistance for the currency is seen at 1.4300 levels.
GBP charts are giving sideways outlook. Currency has its immediate resistance at 1.6550 levels and break of which will push it to 1.6600 levels. Good support is seen at 1.6430 if that level is broken then a test of 1.6375 is expected .Momentum and stochastic indicators are pointing up on daily charts showing the possibility of upper band test.
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