Morning Forex Review

• CHF Retail Sales (07:15)
• GBP Manufacturing PMI (08:30)
• USD ISM Manufacturing PMI (14:00)
• USD Fed Chairman Bernanke Speaks (14:15)
• NZD Labor Cost Index q/q (22:45)

It is expected to be a busy week ahead, with the most notable news releases being the ECB Interest Rate Meeting on Thursday and the US Non-Farm Payrolls number on Friday. A potentially more optimistic ECB assessment on the latest economic data will likely see the euro strengthen against its major rivals. Similarly, a better jobs number from the US will at least slow the greenback's latest decline across the board.   

Today is also expected to be a full day with respect to the economic calendar events. Investors are likely to focus on Manufacturing PMI data from both sides of the Atlantic, with analysts forecasting some slight pull back on the figures from both the UK and the US. Especially for the US, a lower reading on the manufacturing report will re-affirm the recent negative trend on economic data and could  as such hurt the dollar.    

EUR/USD

After dropping to just below 1.30 on Friday to find some support, the pair was seen trading back up towards the 1.31 resistance level, as the dollar has remained weak against a basket of currencies, and on fears that the world's largest economy may be running out of steam. The biggest event for the euro this week will be the ECB Interest Rate Meeting. Although markets are not expecting a change in the current rates, they will be waiting to see for any signaling with respect to future rate policy. Also, the assessment of the ECB on the economic outlook will be very important under the light of the recent positive data coming out from the euro zone. An upbeat assessment could enhance support for the euro, whereas a cautious and divided assessment will likely cast doubts on the single area currency.          

Support/Resistance 1.3050/1.3105

GBP/USD

The cable has consistently kept it upward momentum for several sessions now, supported by both technicals and recent fundamentals. The release of the UK Manufacturing PMI on Monday will be of critical significance, as this will be a test to the recent positive climate on the pound. A better number would confirm the bullish set up and push for more gains. Any significant undershooting could bring about a reassessment on the entire UK economy outlook, with the pound probably suffering on the back of that. 

Support/Resistance 1.5650/1.5785