Pessimism Persist - EUR & GBP vs. DXY

The uncertainty for the European / Soverign Debt crisis, Moody's bank downgrades and the backdrop of Spain & Italy's problems have weigh much longer in the market; while the focus on the coming June 28 summit are making investors more weary of any real resolutions. 

George Soros comments for a workable resolution are well being discussed as a political, fiscal and bank union would place some stability in the financial markets. Although, Germany's Angela Merkel's continued resistance of the EFSF (European Financial Stability Fund) to immediately take over the ECB's holdings of Greek bonds and would not be able to help relieve Spain and Italy from the jump in their borrowing costs.

These would add more volatility in the market meanwhile volume transactions would persist to move lower until a clearer direction would be seen and felt in the market place. Meanwhile, the major reports for the week are seen as a possible catalyst as to where the actual market direction for the USD and the Euro would take. US Consumer confidence, Durable Goods, Home sales and the GDP figures on top of the University of Michigan Confidence makes up the list for the US side; while the succeeding German unemployment figures, and the UK Gross Domestic Product will take the lead for the European market.

EURUSD DAILY AS OF 6.25

Now with that said, let us take a look and analize how the technical charts coincides with the fundamentals. The behavioral market patterns of prices have been induced by traders and mainstreet investors to the direction as perceived by how the market has been reacting to the European debt crisis. The single currency of the Euro has taken the lead as prices continue to move lower and currently at the 1.2480 as of this writing. In our June 18 market view that prices were still within the rising channel but the prices have moved outside of that channel; thus the market heading south to the 1.2380 is now in the making. Likewise, the confirmation of Cable breaking the 1.5580 price support has signaled a longer term bear market that may turn market participants into hysteria mode. This has placed the US Dollar in a better footing still retaining its crown as the World's Reserve Currency. And remains to have enough room for the next leg higher as the 80.05 - 80.89 basis point range has held from the previous trading actions from its correction. As a matter of due diligence; it would be good to check what the USDx levels were when the EURUSD was at the 1.2380 and compare it with the GBPUSD. It is equally important to watch the closing price levels of these three major pairs and relatively compare it to the closing of the USDx at the end of this 2nd quarter and the opening price levels on the first trading day of the 3rd quarter where the outcome of the June 28 summit meeting would result-into. Unless a market spook would occur before or after the EU summit over the weekend as it is ripe to turn itself into an extreme hysteria market.