The Weakness In Euro Is Not Over

Saturday, July 5, 2014 Posted by TFAL Team

It is true that since the June meeting the Euro has rather appreciated.However, i see this lack of weakness in the single currency is temporary. Indeed, some investors took profits after the sharp decline since the 8 May peak (at 1.3993) while others may doubt the ECB's ability to achieve its goal of price stability. However, the recent strength in EURUSD has thus far faded near the 38.2% retracement of its May decline (at 1.3690) As a result, from a technical point of view, the recent rise looks like a temporary rebound, which does not invalidate the longer-term prices deteriorations (rising wedge and double-top formation). As a result, i expect further weakness in Euro especially against the British pound and the US dollar, as the respective central banks are expected to be significantly more hawkish than the ECB. In EURGBP, i see a decline towards the strong support area @0.7754 (23/07/2012 low) . In EURUSD, i see downside risks at 1.3450 (from the double-top formation) and 1.3225 (second leg lower after the temporary rebound) .

Recommendation / EURUSD

Short around 1.3600 : stop @1.3790 , Targets @1.3510 , 1.3450 , 1.3370 And 1.3225