EUR/USD (1,4000): Last I argued for a move to 1,4500 followed by a retreat towards 1,4000. The high was around 1,4325 and not 1,4500 but afterwards sold off to reach 1,4000. The trading pattern suggests that the air above 1,4250 is thin, but I feel, and will still argue, that the momentum points towards 1,4500.

EUR/USD still very much tracks the equity market but equities have lost upside momentum and EUR/USD hasn’t. It points towards less correlation between equities and EUR/USD for the coming period.

The growing risk appetite in Far East creates EUR inflow and should be observed, so keep a close eye on EUR/JPY and investor news from Japan.

I expect fundamentals to gain importance in the currency market, particularly regarding the greenback. Many market participants talk about the US recovery at it is a fact (or at least just around the corner). As a result a faster US recovery than in the Euro Zone, is priced in the Dollar. This week the market got a couple of nasty negative surprises. The May US consumer confidence at 49,3 was way below forecasts, and the worse than expected non farm payroll Thursday are clear signs that the market prices a too fast US recovery in.

The situation in Europe is really bad, and one day it will hurt EUR, but the missing fast recovery in US will be in the limelight during July. Not that EUR/USD will explode, but a fair and sustainable break of 1,4250 is the first step. The range will still be 1,4000 / 1,4500 though mainly in the upper end. Talk about 1,5000 will re-emerge, and European politicians will be forced away from their sunny deck chairs to intervene verbally.

Important numbers the coming week are German May manufacturing orders (exp. -0,2% m/m) and the very important Consumer Confidence from University of Michigan on Friday (exp.71,5) – I am bearish…….

Target: 1,4500.

EUR/GBP (0,8570) – GBP/USD (1,6350): Sterling remains very interesting. Overall I judge that UK is through the worst decline, but I am by no mean taking about any V shape recovery. The private housing market shows signs of stabilisation as the (only) good thing, though very important. Commercial properties needs another hit (or two) and the banking industry is ruined – i.e. no chance of any fast recovery.

Important is to follow if the UK economy will stabilise, so the Bank of England comments on Thursday are worth to spend some time on. These guys have been so bearish that even their own government got angry, but Bank of England has just been honest and realistic. I feel for a further GBP positive sentiment so I move the EUR/GBP range from 0,8500 / 0,9000 to 0,8250 / 0,8750.

Targets: EUR/GBP range 0,8250 – 0,8750 GBP/USD range 1,6050 – 1,6550 .

EUR/JPY (134,40) – USD/JPY (96,00): Japan is getting more interesting, but JPY is trapped between the investor related flow from Japan into the Euro Zone and the downwards pressure in USD/JPY. The bearish momentum in USD/JPY will grow, but not really towards 90,00. On Wednesday I am alert when the May Machine Orders (exp. +2,4%) and the May trade balance numbers are released – important information.

Targets: EUR/JPY range 133,00 / 138,00 USD/JPY target 93,00

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