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Fundamental Analysis:

The dollar continued its weakness in last week’s trading session against a basket of other major currencies, after a string of disappointing U.S. economic reports fueled fresh concerns over the strength of the recovery.

Official data showed that U.S. retail sales including automobiles were flat last month, confounding expectations for a 0.2% rise. March’s figure was revised to a 1.1% increase from a previously estimated 0.9% gain.

Core retail sales, which exclude automobiles, increased by 0.1% in April, disappointing expectations for a 0.5% gain. The change in core retail sales for March was revised to a 0.7% increase from a previously estimated 0.4% uptick.

The University of Michigan said in a preliminary report that its consumer sentiment index fell to a seven-month low of 88.6 this month from 95.9 in April. Analysts had expected the index to decline to 96.0 in May.

The UoM also said its inflation expectations for the next 12 months ticked up to 2.9% this month from 2.6% in April.


Technical Analysis:

EUR/USD rose to as high as 1.1466 last week. The current development indicates that rebound from 1.0461 is correcting whole down trend from 1.3993. Initial bias remains on the upside this week as 21 is still crossing 55 EMA upward and further rise might be seen to 38.2% retracement of 1.3993 to 1.0461 at 1.1810. On the downside, break of 1.1131 support is needed to confirm near term reversal. Otherwise, outlook will stay mildly bullish in case of retreat.


Later this week, investors would be taking a close fundamental look at German ZEW Economic Sentiment and German Ifo Business Climate, USD FOMC Meeting Minutes, French and German Flash Manufacturing PMI, USD Unemployment Claims, USD CPI m/m and Core CPI m/m.

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