EUR: Week was again dominated by uncertainty over the peripheral Eurozone

EUR/USD

Despite lacklustre demand for the latest debt issuance by various EU states, the pair finished the week largely unchanged amid a sharp drop by the USD index following the release of much� weaker than expected US GDP report. The week was again dominated by uncertainty over the peripheral Eurozone, with rumour that Italian minister Tremonti has resigned, together with the fact that Moody?s put Spain's credit rating on review for the a downgrade, all depressing investor appetite for the currency. BNP Paribas noted that Eurozone?s inflation has unexpectedly slowed down and as a result, the possibility of the rate hike in the euro area has decreased. However, analysts at BNP Paribas claim that the main reason of inflation?s slowdown may be the changes in Eurostat's methodology in January when the list of factors regarded as seasonal was enlarged.

GBP/USD

The pair finished the week higher and was largely supported by a weaker USD and also by the fact that excluding ?special-factors, the UK economy grew by 0.7%, as noted by the ONS. Nevertheless, weaker UK retail-sales index which fell to its lowest level in 13 months in July underpinned the fragility of the economic recovery. Of note, analysts at Commerzbank report that as long as currency is trading above 1.6260, it has chance to recover to the 78.6% Fibonacci retracement of the decline from April and May maximums in the 1.6540/47 region

USD/JPY

The pair trended lower throughout the week and touched on 77.00 by Friday following the release of a much weaker than expected Q2 US GDP report. In addition to that, the data showed that the Q1 GDP was revised to 0.4% from 1.9%. Of note, analysts at Societe Generale believe that as there?s some temporary improvement in Europe, all attention will switch to the United States and as a result that recommends selling the pair with a target at 75.00. This view was also echoed by HSBC, where analysts believe that there is a risk that the pair may fall to 72.00 or even 70.00 level.

Source: http://www.fxstreet.com/technical/market-view/weekly-fx-wrap-up/2011-07-29.html

Foreign Exchange EUR/USD GBP/USD Economy Finance