The greenback could find demand again after the risk appetite has got a new hit today by the released Chinese comments about its plans to not be aggressive in stimulating its economy while the worries about the Spanish banking system are still putting pressure on the single currency versus the greenback after it could raise its head over the 1.26 level in the beginning of the week following an opinion poll in Greece has shown rising of the pro-bailing out parties.

The single currency could hardly hover over 1.25 by the end of last week with increasing market worries about the debt contagion risks in the EU and the economic slow down which can lead to further ECB's easing steps by injecting more cheap money into its struggling banking system for reviving the economy and calling the market worries especially in the case of Greece's departure out of the EU.

God Willing, We are waiting today for May US consumer confidence release which is expected to be 70 from 69.2 in April before series of data about the US economy to come this week about US pace of growth in the first quarter and also about the manufacturing sector and the labor market performances this month while the market is living a wait and see stance looking for new clues about the political situation in Greece and the Spanish banking sector.

God willing, in the case of falling further the pair can meet now supporting level at 1.25 psychological level which is still holding capping it from further loses which can lead to reaching 1.2151 which its breaking can open the way for 1.1876 again whereas the pair has rebounded forming its bottom on 7th of June 2010 which drove the pair later to reach 1.4939 on 4th of May 2011 whereas the pair has managed to ease back again and in the case of rising again the pair can face resisting levels now at 1.2626, 1.2757, 1.2867, 1.3063, 1.3180 and this can be followed by 1.3281 which its breaking can open the way to 1.3384 again before 1.3489 whereas it has formed its recent top and in the case of breaking 1.3489 the pair can meet other resisting levels at 1.3546, 1.3613, 1.3808 before 1.387 which has not been broken since the end of last October and after several tries to break it in last November.

Kind Regards

FX Market Strategist

Walid Salah El Din