NEW YORK ( BBH FX Strategy) -- Here is our currency markets forecast for next week. USD: The dollar is likely to remain firm next week amid concerns that the global economy is losing steam. This dynamic should continue to drive positioning adjustments that are also broadly dollar supportive. Technical momentum may be supportive for the dollar as well after most of the majors failed to break the top end of their recent ranges. This should result in a reversal in the price action and may lead currencies to test the bottom end of their recent ranges as positioning adjustment continues. But the inability to break key levels means currencies are likely stuck in recent ranges. On the data front, next week we get more business surveys for March, with the Chicago PMI the key report. Expectations are for a slight decline to 63.0 from 64.0. Next week we get speeches from Plosser, Bernanke, Rosengren, Fisher, Bullard, Lockhart and Lacker (both of which are voters). However, recent economic developments argue that the prospects for QE3 have declined. This is likely to limit the influence that these speeches have on price action.
EURO: The combination of technical momentum and renewed concerns over the euro zone economic outlook should weigh on the euro next week. The euro failed to break through the key resistance level of 1.330, suggesting that a near-term top may be in place. The flash reading of the eurozone PMIs disappointed expectations and failed to break the boom/bust level of 50, adding concerns that the economy has yet to stabilize. Germany's manufacturing PMI even slipped to 48.1 from 50.2 in February. Next week, Germany's IFO for March should help crystallize the near-term economic outlook. France, Italy and Spain all issue debt, with retail sales in Portugal, Spain and Greece expected to be watched closely. On the policy front, the focus of next week's finance ministers meeting will center on discussions about combining the EFSF/ESM and finding a replacement for Juncker. Germany's finance minister, Schaeuble, is one of the leading candidates. Key Levels: Resistance at recent low of 1.300; break of recent low opens up a technical target of 1.262, the early January low. GBP: The combination of the weak February retail sales report and the downwardly revised figures in January brings into question the recent resilience of Britain's economy. The dovish surprise from the recent minutes also keeps open the possibility of another round of QE in May. The potential for further policy easing should remain a headwind for sterling against the dollar but our sterling outlook against the euro remains more constructive amid renewed concerns over the economic outlook in the euro zone. Key Levels: Resistance seen at 1.588; support around 1.56.