The 6660 level has been pivotal so any move below it could give 6606 a potential test. Below that the level to watch is 6540, which has provided a plethora of buy-on-the-dips momentum.
Political upheavals in Italy coupled with word from the political opposition that there will be a default as well as riots this autumn could provide a few problems for the euro. Tomorrow sees the Italian GDP number announced – a contraction of 0.4% is expected.
German factory orders are also one to watch tomorrow – they fell back in May and put some gravitas to a fallback in industry for the superpower. An increase of 1.1% is expected in June – any deviation to the downside again puts pressure on the single currency.
The French trade balance will be released on Wednesday. We have had numerous bits of rhetoric citing that the worst of the crisis is over. May’s deficit increased above €6 billion for the first time since June 2012 – it is expected to improve to -€5 billion this time around.
The German trade balance will be the focus on Thursday, when trade surplus is expected to reach €15.2 billion. Any upside surprises will be bullish for the euro.
For the EUR/USD currency cross, $1.3420 is the level to beat. For now we remain in a range with $1.33 capping the gains. The $1.3250 support needs to hold otherwise we are likely to see a fall to $1.3180.
The level $1.5430 is the key to additional upside for GBP/USD, with $1.5260 the lower support. A fall through this gives way to more significant weakness in the pound and opens up the $1.50 level if $1.5080 fails to hold.
With the Bank of England inflation report due on Wednesday and Mark Carney having his first foray into answering questions on the UK economy, we would not expect him to be very hawkish. Today's services PMI data has been excellent, but by historical standards the economy has a long way to go. Inflation and growth-related forward guidance is also expected this week, so inflation really needs to pull back slightly if more QE is to be added.
Standard Chartered’s results are released on Tuesday, and with a slowdown in China and to a lesser extent India, its results might give traders and investors pause for thought. However, the sell-off in sympathy with HSBC today might mean the worst of the decline is already over.