EURUSD (week: 10-14 Apr., 2006)

Last week, EURUSD pushed higher and reached the January high of 1.2320, only to descend rapidly on Thursday and Friday on dovish comments from ECB officials and a stronger than expected NFP report, ending the week at 1.21. Double top is now established just above 1.23, while daily RSI is just about to turn negative. We are inside a channel that could temporarily limit the pair on the downside, with the inferior trendline in the 1.2080 area (also 50% retracement of the latest 1.1825 - 1.2330 move), which will probably act as primary support. However, even if the pair may see some bounce here after a first failed test, we see interest rate speculations as further supporting the dollar, therefore we expect a breach below 1.2080 during this week, with primary target at 1.20 and 1.1930 later. On the upside, 1.22 should limit any correction wave for now, any successful test there aiming back at 1.23 and above.


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