Daily Fundamental Report 22/6/2009

EUR/USD failed to maintain the higher levels. It started the week with trading remains within narrow ranges as the difference so far between the intraday high at 1.39468 and the intraday low at 1.38539.
We see the stochastic indicator is attempting to show a bearish crossover on the daily charts supported by indicator that is signaling for downside movements where targets are now at the 61.8% correction at 1.39102. A breach of this level will take the pair to 1.37562 as an initial target. Note that this decline may be stalled as fundamentals from Germany on queue later today are rather optimistic.
In the Euro zone next on our calendars we have IFO current assessment for June, in which projections show that it will incline to 83.0 from the previous 82.5. Although the reading is slowly rising yet is further giving us evidence that the government interventions and the ECB actions into recovering economic growth are creating a difference in the economy.
The World Bank stated that the global recession is worse than what was expected earlier, from the beginning it had caused investors to sell higher yielding assets and buy lower yielding assets, which weighed on the Euro heavily in the markets causing it to lose strength.
We expect the pair USD/JPY is to correct to the upside towards 96.692 at the very least as momentum indicators show the pair being oversold before reversing back to the downside with enough bearish momentum to breach the above mentioned support level and target 95.00 and 93.523 respectively.
A relatively quiet week for UK economic data will put the spotlight on the testimony by BOF MPC members to the Treasury Select Committee and the DMO gilt auctions. The MPC members are likely to reiterate their warning when they testify on the Inflation Report on Wednesday that the economy still faces major hurdles before recovery is assured, even if the data justifies optimism that we could see a return to marginal growth in Pounds later this year.