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

The dollar ended last week on a soft tone, as the NFP figures came out lower than expected on Friday. As a result, EUR rallied to 1.2858 and closed the week at 1.2813. The greenback's failure to hold on to its recent (fragile) gains points towards a possible continuation of the decline into next week. The tests lower just above 1.27 proved just a correction of what looks like a continuation of the upward wave started at 1.2477 and aiming towards 1.30 and above. This move has recently been confirmed by the new support area established around 1.27 and the daily (and weekly) close above 1.28. Next targets for the pair are now 1.2890 and 1.2906, followed by 1.2978, while on the downside support stands at 1.2790, 1.2765 and 1.27. RSI is bullish on both 4h and daily, while MACD is showing a slight bearish divergence on 4h, signalling a possible minor retracement down; however, as long as 1.27 holds, the picture continues to be bullish in both mid-term and short-term.

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