After recording a new 3 months low at 1.2458, EURUSD recovered
gradually and managed to close the week at 1.2694. The recent
rally in EUR was prompted to some extent by Wednesday's statement
from Fed's Bernanke that recent growth in the U.S. has been
"moderate", thus diminishing the chance of a Fed
rate hike in August. As key support just above 1.2450 held,
EUR bulls stepped in with renewed forces and look determined
to sustain the common currency's current rally. Both hourly
and daily studies are bullish at this time, daily RSI turned
positive, and the daily/weekly close above key support level
at 1.2670 (4h 100 and daily 20/50 MAs also standing just below
this level) favors a continuation of the bullish trend into
next week as well. Below 1.2670, EUR will be supported at
1.2620 and 1.2605, a level which we expect to hold for the
week. On the upside, a break of 1.2690 will target 1.2730
and 1.2777 (previous support and 61.8 fib. of 1.2978 - 1.2458),
before the pair can aim for the next key resistance level
at 1.2860. Some retracement into the 1.27 zone is possible
after a failed test here. After 1.27 is successfully broken,
we expect the pair to trade inside the 1.2650 - 1.2860 consolidation
range for some time, before EUR can climb back above 1.29
and possibly establish a new yearly high later.
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