European session: USD continues rally [E]

Next data issued:

06:00 DE Wholesale prices (May) 0.7% 1.0%

06:00 DE Wholesale prices (May) г/г 5.0% 3.2%

08:00 IT Industrial production (April) adjusted -1.0% 0.6% -0.1%

08:00 IT Industrial production (April) adjusted, г/г -2.6% 4.2%

08:30 UK PPI (Output) (May) unadjusted 0.3% 0.2% 0.6%

08:30 UK PPI (Output) (May) unadjusted г/г 3.0% 2.4%

08:30 UK PPI Output ex FDT (May) adjusted 0.2% 0.4%

08:30 UK PPI Output ex FDT (May) adjusted, г/г 2.4% 2.3%

08:30 UK PPI (Input) (May) adjusted -0.5% 0.4% 2.5%

08:30 UK PPI (Input) (May) adjusted, г/г 13.8% 15.7%

On Monday on European trades the dollar continues the longest rally against the euro since November. The reason is speculations that the report expected on this week will show inflation growth in the USA and will prompt the Federal Reserve to raise interest rates for the 17th straight time.

The expectations of weak report from Germany, which can show the sharpest decrease of investors’ confidence in June for last 5 months, put pressure on euro also.

It is possible to note that among issued news the growth of producer price index in May in Britain was the most significant since September 2005. So strong growth explained by a record high prices for oil. Besides monthly and year growth of output prices in May has appeared above economists’ forecasts. However it has not rescued pound from sales though they were not such significant as euro.

EUR/USD after consolidation in narrow range $1.2610/40, the rate continued downturn. As a result, it was reached an important support $1.2570/80. However, recoil has not followed. Nevertheless, on the hourly chart probably formation of bull divergence, that speaks about an opportunity of recoil.

GBP/USD after testing of resistance $1.8470 became to decrease. As a result was tested support level $1.8380. From here the rate has rolled away to $1.8410.

USD/JPY after consolidation in range Y113.95/114.20 gained to Y114.50. After that the rate stabilized in this area.

Today it is not expected any important news. However, it is necessary to pay attention, that Cleveland Fed Bank president Pianalto will give a speech on the economy and monetary policy today in the evening. Fed Bank of Dallas President Richard Fisher also speaks today.