EURUSD: Retarget Of The 1.2330 Level Continues To Dominate.
EURUSD: Continuation of weakness off the 1.3298 level was seen Monday opening up risk towards the pair’s YTD low at 1.2330. While the dominant trend remains to the downside, a retest and break below the 1.2330 level is required to resume its medium term decline and expose the 1.2134 level, its .50 Ret (its 0.8231-1.6038 high, monthly chart) ahead of the 1.1827 level, its Mar’06 low and then its Nov’05 low at 1.1640.The latter being the trigger for the beginning of EUR’s longer term weakness. The G10 currency complex and our own 7-currency model tones are medium term bearish and with the failure of the pair at the 1.3298 level in late Oct’08, the 1.2330 level is now in sight. Daily momentum indicators remain supportive of this view. Resistance is now initially located at the 1.2728 level, its Oct 22’08 low and subsequently the 1.3005/58 area, its Oct 23’08 high/.618 Ret (0.8231-1.6038 rally, monthly chart) with a clearance of there aiming at the 1.3259/98 level, its Oct 10’08 low/Oct 30’08 high. On the whole, with follow-through days seen, retest of the 1.2330 level and beyond is now envisaged.
SupportComments
1.2484 Oct’06 low
1.2330/24 Oct 28’08 low/Jan/April’06 highs
1.1827Mar’06 low
1.1640Nov’05 low
ResistanceComments
1.2728Oct 22’08 low
1.2866Jan’07 low
1.3058/05Oct 23’06 high/.618 Ret (0.8231-1.6038 rally, monthly chart)
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