We start the week with a EUR/USD move below the 50 MA, and indicator point lower, after the pair was trading at 1.1190 in the early hours. This price action is due once again to the Greek after they managed to strike a 3rd bailout deal with European official. Let’s see if Tsipras will get parliament approval. For the moment we see a short term downtrend in the EUR/USD pair by looking at technical indicators. The pair is trading below moving averages in the daily, H4, and hourly charts. In order to confirm the down move we need to see a brake of 1.1000, and then 1.0950, 1.0900, or we might get stuck in a 150-250 pip range we are currently in.
Important events to watch will be the ZEW sentiment post Greece, inflation, rate decision, and of course the ECB press conference, which we expect to be light in guidance.
Tuesday – retail sales jumped 1% last month, but are expected to slow down this month. Any positive reading will push the dollar up.
Wednesday – Yellen’s testimony is not expected to provide any more insight than what she did on Friday. Any hint of a rate hike will help the USD up.
Tuesday – we expect inflation to stay around the 0.1% level. Anything less and GBP will suffer, and vice verca in case we see an improved figure.
Wenesday – we need to watch the average earnings index, as any further increase will put pressure towards a rate hike helping the GBP to gain some strength.