Talking Points

• Euro: Italy Fails to Elect President, Slovenia Sets Up Bond Investor Meeting

• British Pound: U.K. Retail Sales Disappoints, Range-Bound Prices Ahead

• U.S. Dollar: More Fed Rhetoric on Tap, G20 Meeting in Focus

Euro: Italy Fails to Elect President, Slovenia Sets Up Bond Investor Meeting

The Euro pared the advance to 1.3072 as Italy failed to elect a new president during the first round of voting, while Slovenia tapped commercial banks to establish international bond investor meetings in an effort to avert a bailout.

Meanwhile, following a visit to Portugal, the Troika – European Union, European Central Bank, and International Monetary Fund – said it ‘discussed with the government compensating policy measures for meeting the agreed fiscal deficit targets given the recent Constitutional Court ruling and reviewed progress on the on-going public expenditure review,’ but we may see the periphery counties operating under the single currency make further attempts to buy more time as they struggle to get their house in order.

In turn, German Finance Minister Wolfgang Schaeuble argued that the EU ‘must avoid turning the problems in Cyprus into new problems for other euro countries’ after Germany’s lower house – the Bundestag – approved the EUR 10B bailout for Cyprus, but the persistent threat for contagion may continue to dampen the appeal of the single currency as European officials preserve a reactionary approach in addressing the risks surrounding the region.

As the EURUSD fails to hold above the 38.2% Fibonacci retracement from the 2009 high to the 2010 low around 1.3120, the pair appears to have put in a lower top in April, and it seems as though the euro-dollar is carving out the right shoulder of a head-and-shoulders top as the fundamental outlook for the region turns increasingly bleak.

British Pound: U.K. Retail Sales Disappoints, Range-Bound Prices Ahead

The British Pound is tracking higher on Thursday, with the GBPUSD advancing to a high of 1.5291, but the rebound may be short-lived as the U.K. faces a slow but sustainable recovery.

Indeed, retail spending in Britain fell 0.8% during the month of March amid forecasts for a 0.6% decline, and the persistent slack in the real economy may produce sideways price action in the GBPUSD as the Bank of England (BoE) maintains a neutral stance for monetary policy.

As the GBPUSD trades back above the 50.0% Fib from the 2009 low to high around 1.5260, we may see the pair make another run at the 1.5400 region, but the sterling may struggle to hold its ground in the week ahead should the fundamental developments coming out of the U.K. fuel fears of a triple-dip recession.