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Forex pairs in this Article » EUR/USD
FXstreet.com (San Francisco) - The EUR/USD performed on Monday its first positive day in the last four sessions and after losing around 300 pips since June 19’s top at 1.3415, the pair has managed to recover ground today's session and to close 0.20% up on the day at 1.3115. The perspective has changed to slightly bullish in the 1-hour chart according to the FXstreet.com trend index. So, has the market seen any floor over there?

After watching the global sell-off in equities and the rise in bond yield, it seems the deleveraging in market has intensified after the Federal Reserve QE tapering idea. However the US dollar is showing signals of stabilization in the Forex sphere.

Indicators in the 1-hour windows are mixed as CCI and Momentum are bullish, the MACD is neutral but the Stochastic is bearish. "The EUR/USD hourly chart shows price recovered above its 20 SMA and the 50% retracement of the latest daily bullish run, while indicators head north above their midlines, pointing for further upward corrections ahead of Asian opening," comments Valeria Bednarik in a recent report.

Bednarik also stated that "above the daily high of 1.3143, the advance could extend up to 1.3180 area, 38.2% retracement of the same run." But it's just a correction? Quoting the big banks, they believe the USD is getting stronger so, the EUR/USD's movement is just a correction.

Bearish, bearish and more bearish, it's true?

The ING analysts’ team "looks for momentum and especially valuation to support the dollar over the next twelve months." They see the USD "rallying broadly 10% over the next 6-12 months, which will send EUR/USD close to 1.20." HSBC published in a previous report that the "USD is in the midst of a powerful rally," as they believe "the intensification of the Currency War is playing its part in the USD gains."

Rabobank is more tempered. The bank's analysts aren't too bearish as they expect the EUR/USD to hold in the 1.34-1.32 region on a 3 mth view. In the 1-year view, however, they expect EUR/USD in 1.28 zone with downside risks. Nevertheless, The FXstreet.com forecast poll shows a significant data: only 2 banks and 2 traders aren't bearish in EUR/USD for the current week.

In fact, Bednarik wrote on a Friday's piece and remarked on Monday in a LAR's interview that it would be better to the market forget the 1.3500 and to look for sub 1.30 levels as "it took the EUR/USD 4 weeks to advance from 1.2795 to 1.3415, but it only took it 3 days to erase half of such gains." Bednarik commented that despite the Fed "did not gave a certain date, nor changed the Central Bank requirements to achieve such target, he only explained how they will taper, when the time comes."

Bednarik pointed that the Fed words were "enough to made EUR/USD shed 100 pips in a blink and built the bearish momentum, but it was the IMF menacing to halt payments to Greece, what gave the pair the coup de grace." With the new week, there are a lot of downside risks in the EUR/USD as the European crisis is yet far to be solved and now former Silvio Berlusconi was banned from public office, adding more uncertainty to the Italian situation as bunga bunga is leaving a big void of power in the Italian Il Popolo della Libertà.

On the other hand, will be the Fed comfortable with the US rally? The question will be on the upcoming FOMC members and its Pro-QE or anti-QE words. Today's Kocherlakota words are a example of it: The Federal Reserve Bank of Minneapolis backed the QE buying until unemployment falls below 7%.

As for tomorrow, the durable goods orders are the only significant release and later on the week, the US GDP will focus market attention, but the events to follow should be Bernanke's speeches. So, listen carefully him.
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