Broad picture begins to look bullish for the EUR, with
Fed tightening campaign nearing its end and further rate increases
probable from the ECB. EURUSD finished last week on a very
high tone, only a few pips under 1.22, the first resistance
level that has to be broken by the pair on its way to its
next target, 1.2325 (100% retracement of the downward wave
started on Jan.23 that went as low as 1.1825). Dollar's weakness
across the board helps building confidence among EUR bulls
and gather steam for a continuation of the recent rally. However,
we favor a correction wave down for the pair during this week,
that could bring the 1.20 area back in focus. 1.2230 could
limit first tests on the upside, while 1.2130 and 1.2080 will
stand as support levels. Momentum and RSI are bullish, however
indicators show signs of overbuying. In conclusion, expect
a breach of 1.2230 to lead the pair rapidly above 1.23 (where
it will probably meet strong resistance), while failed tests
at this level would argue for some consolidation and thus
a retracement move down. There is also a possibility that
1.22 be just the tip of an iceberg standing below 1.15, but
further pattern confirmation and a weekly close below 1.19
are required before such a scenario could come into focus.
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