Ella 
EUR/USD
EUR/USD has been trending lower over the past five weeks, falling from a high of 1.0938 on May 22 to a low of 1.0669 on June 15. There are a number of factors contributing to this weakness, including political uncertainty in France, mixed economic conditions in the Eurozone, and a stronger USD. The ECB’s rate cut on June 6 failed to provide sustained support for the euro as investors remain cautious about the economic outlook for the Eurozone.
Short-term (five-day) outlook: The euro is likely to remain under pressure in the short term as investors await the outcome of the French election. The Eurozone’s flash HICP inflation rate for June, due on June 28, will also be an important event to watch. If inflation data is higher than expected, it could reinforce the ECB’s hawkish stance and provide some support for the euro. Conversely, if inflation data is weak, it could fuel expectations of further rate cuts, putting potential pressure on the euro.
German GfK Consumer Confidence Index (July) on Wednesday, June 26.
June 28 (Friday) Eurozone HICP inflation rate (June), French CPI (June), German unemployment rate (June), speeches by ECB officials Rehn, Panetta and Ryan.
GBP/USD
GBP/USD has been range-bound for the past five weeks, trading between 1.2550 and 1.2800. Signs of a UK economic recovery, including stronger-than-expected GDP growth and falling inflation, have provided support for the pound. However, uncertainty surrounding the upcoming general election on July 4 has limited the upside potential for the pound.
Short-term (five-day) outlook: The pound is likely to remain volatile in the short term as investors position themselves ahead of the election. The second estimate of first quarter GDP growth, due on June 28, is likely to provide further confirmation of the UK’s economic recovery. If the data is unexpectedly positive, the pound will be supported. Conversely, a downward revision could weigh on the pound.
June 28 (Friday): UK Q1 GDP (second estimate), UK current account (Q1).
USD/JPY
USD/JPY has been trending upwards over the past five weeks, rising from a low of 156.60 on May 24 to a high of 159.95 on June 21. The divergence in monetary policy between the Bank of Japan and other major central banks has led to a widening interest rate differential, driving the pair stronger. The Bank of Japan decided to maintain its ultra-loose policy at its June meeting, but this did not prevent the yen from falling.
Short-term (five-day) outlook: USD/JPY is likely to remain supported in the short term as the interest rate differential remains wide. The US PCE inflation data on June 28 will be a key event to watch. If the data is higher than expected, it may further support the US dollar and put upward pressure on USD/JPY. Conversely, if the inflation data is weak, it may lead to a pullback in the US dollar, providing some respite to the yen.
Thursday, June 27 Japan Retail Sales (May), Japan Industrial Production (May), Japan Unemployment Rate (May).
June 28 (Friday) Japan Tokyo CPI (June), Japan Industrial Output (May), US PCE Inflation (May), US Personal Income and Spending (May).
