We can expect some volatility during this week as everyone gets ready for the most important Non-Farm Payrolls figure in the US which will be released on Friday. With the German unemployment figure released on Tuesday, we might expect Mr Trichet to alter his hawkish stance despite the fact that recent euroland CPI figures suggested some inflationary pressures.
On a technical note, price is still situated in an overbought condition and it still seems that a possible double top has formed on the daily chart. Therefore if price breaks free from the consolidation between 1.5835 and 1.5745 to the downside, a suitable bearish trading condition will present itself.
On the other hand, Sterling is picking up some serious momentum to the downside and if the 1.9840/50 low is taken out and sustained, we will once again take this opportunity to trade within this bearish probability as the continuation of the downtrend from 2.1160 is still sustained.
The manufacturing data which will be released on Tuesday in the UK might give us an indication of how and where the BoE might ease as euroland receives most of the UK’s exports and a weakening Sterling especially against the Euro might be a pivotal point for the BoE to interpret.
