European Forecasts

The EUR/USD continues to fluctuate heavily amid the high uncertainty and mixed outlook for the euro area stability and the fiscal crisis, nonetheless, the euro on Thursday was generally higher and scored gains on the weak dollar with eased debt focus. We saw some positive euro sentiment support in the session on Thursday that supported higher yielding assets with news that China is interested in buying the European Financial Stability Facility bailout bonds for Portugal that will be auctioned in June. The reports supported the sentiment especially after the European Commission European Financial StabilizationMechanism (EFSM) raised 4.75 billion euros in its second bond issuance this week, as they sold five year debt to fund the bailout for Portugal. Trichet also added the upside support by assuring that the ECB’s mandate remains price stability and that they need to ensure that the rising commodity prices does not fuel higher inflation expectations and second round effects. The remarks supported the euro on expectations the...

  The week ends with nationwide house prices for May from the UK due at 06:00 GMT, while at 12:30 GMT, 13:55 GMT, and 14:00 GMT the US will release important data including personal income and spending, University of Michigan confidence and pending home sales respectively. On Thursday, the pound rebounded for the third day against the dollar, as the green currency remained vulnerable after the grim durable goods data released on Wednesday, while US 1q GDP annualized data released on Thursday came lower than forecasts of 2.2% expansion with 1.8% growth, and initial jobless claims for the week ended May 21 rose to 424,000 from 414,000 a week before.     Despite the rebound in the pound which pushed the pair up for three consecutive sessions, the outlook for the pair remains to the downside as the British economy's outlook is still uncertain, especially after the weak second-quarter data released recently which raised concerns that recovery pace would wane, while, on the flip...

The week ends with the release of KoF Swiss leading indicator which is estimated to retreat to 2.22 in May from the preceding 2.29, as of 09:30 GMT. On the other hand, at 12:30 GMT, 13:55 GMT, and 14:00 GMT the US will release important data including personal income and spending, University of Michigan confidence and pending home sales respectively. The Swiss franc strengthened for the third day against the greenback after upbeat trade data which showed that Swiss trade surplus widened in April to 1.52 billion francs compared with the revised surplus of 1.00 billion francs, where exports climbed 7.9% from the revised 3.1% drop. The data ensured the SNB Vice Chairman Thomas Jordan announcement on Monday that exporters coped with the franc's appreciation which actually may give some room for the SNB to raise interest rate, yet it depends on inflation data, as stated by Jordan.   On the other hand, the dollar remained weak on Thursday as GDP annualized...

  The USD/CHF pair fell again during Wednesday’s trading as the overall trend line on this chart seems to be holding. The CHF is strengthening against almost all currencies, so this is no real surprise. The market is definitely a sell on the rallies kind, and this latest move simply reiterates it.

  The GBP/USD pair rose on Wednesday, and is currently testing the 1.63 area. If it breaks above there, we feel much more confident in buying this pair as it should run back towards 1.68 because of it. The pair has been in an uptrend for quite some time now, and this wouldn’t be surprising. Look for buying opportunities on a close above 1.63 or so.

  The GBP/CHF pair fell Wednesday, but held support and formed a hammer. The 1.42 is turning out to be very important and significant support as time goes by. The market is decidedly down, so we don’t like longs – even if there is a good shot at a bounce here. Look to sell rallies.

  The EUR/USD fell, and then bounced at the 1.40 level on Wednesday as the markets took a breath after falling in general. The EU still is a dangerous place to be investing in. The pair looks like it is set to bounce around between 1.40 and 1.42, and could for a while. However, there is a lot of headline risk involved with holding the Euro.