In our weekly outlook we advocated going long on the GBPUSD but warned of an initial pullback early in the week.

With the Forex markets being dominated by risk trends it was inevitable that many would seek the relative safe haven of the US dollar as markets stumbled. However today saw what looked like a 'decoupling' of the Forex markets from the S&P 500.

Importantly the GBPUSD held onto lower trend line resistance with the pair climbing above 1.435 resistance and the all important 1.44 level.

Futher unwinding from the oversold RSI reading shold support additional gains in the coming sessions.

Objectives are moved to 1.4530 and the 11th May low at 1.4720 which corresponds with the 61.8% retracement level from the recent fall.

Overview

A fairly busy news flow this week with key events being both the US Fed interest rate decision on Tueday and the Bank of Japan interest rate decision due on Wednesday. Potential volatility for the dollar this week will also come in the form of the Consumer Price Index figures released on Thursday.

Main risk to the Euro will be the German ZEW survey on Tuesday. This is likely to be keenly watched as a barometer of the recovery potential of the Euro Zone. A significant question mark still remains over the Greece situation.

The tail end of the week sees Canada release both the Consumer Price Index released Thursday and Retail Sales figures on Friday.

Full Economic Calendar

Pairs Technical Outlook

EUR/USD - Falling parallel channel resistance should see the pair retreat and head to new lows. The 50 day SMA is additionally weighing on any upside action. Osciallators starting to show overbought readings.

USD/JPY - No clear outlook or trend is showing in the USD/JPY. Falling trend line resistance at (currently 91.20) could be a near term target. 89.60 provides strong downside support.

GBP/USD - Bias remains to the downside for a break below 1.50. While the pair briefly breached 1.52 last week the market has failed to make any headway and fallen back into the 1.50's. 20 day SMA is still falling and should cap any near term moves.

USD/CHF - Key support is at 1.0456 which should contain any further falls in the pair. Expect the market to reverse around thisarea and then resume upward trend.

USD/CAD - Last weeks break of 1.02 opens up further risk to the downside. Moves towards parity now seem likely. The pair is currently very oversold so be wary of short term rise as this unwinds.

AUD/USD - The rise in Australian Interest rates has supported near term pricing but expect to see at least a short term correction from 9200 high. 9047 provides trendline support. A break will see decline accelerate.

NZD/USD - Mixed signals on the NZDUSD. Bias is to the downside. A break of 7110 would invalidate this new term view. A break below 69.50 could open a move to former support at 6804.

Pair in Play

A clear downwards parallel channel can be seen in the EURUSD Daily chart. Following a test of the upper trendline on Friday, today the pair has emphatically reversed.

Certainly some short term weakness should be expected from the pair. 134.23 is likely to prove support if a reversal into the channel occurs. Capping a move north is channel trend line support at 137.31 and falling roughly 25 pips per day. 138.50 caps recent highs and a breakout of channel support.