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Forex pairs in this Article » EUR/USD (San Francisco) - After a shy attempt above 1.3500, the EURUSD was slapped at 1.3520 and launched to a minimum of 1.3425 where the pair found support. The bloc currency is closing the NA session in the negative territory on Wednesday, extending its consolidation pattern around the comfort zone in the mid 1.34s.

Overall sentiment continues bearish in the Euro field, the EURUSD lacked in conviction and came under pressure after Portugal's PM said unemployment figures are worrying and verbal interventions such as Rehn saying that Eurozone growth will only turn positive in the H2 2013.

In the UK, the pound tumbled after BoE Governor Mervyn King said the bank's is unlikely to begin tightening monetary policy soon, arguing that such a move could derail a fragile economic recovery. In America, US Retail sales posted a weak 0.1% increase in January, however it was the third straight positive week. The alarm came from the bonds market, where the US 10 Y bonds was sold above 2% for first time in a year.

EURUSD confirming cap

In a recent report, UBS' analyst team states that the Cap on EURUSD is confirmed. The bank pointed that "ECB head Mario Draghi capped the rise with statements in the deutsche Bild-Zeitung that were similar to statements made at the press conference last Thursday. "A pronounced rise of the euro would significantly hurt the growth outlook in peripheral countries and question their efforts to consolidate their finances", they commented.

In this line, Wells fargo Currency Strategist Nick Bennenbroek says that the Greenback is weaker with focus on international developments. "The euro was firm early on, but has reversed course after unsourced reports by a German newspaper said the ECB is concerned a strong currency could hurt the competitiveness of the Southern European countries. The yen is steady, reversing earlier intraday losses. In addition to firm Japanese data, the G7 statement on exchange rates has potentially removed some of the downside momentum from the Japanese currency."

EURUSD's rejection from the 1.3520 area and subsequent drop below 1.3500 have turned the cross' outlook negative in the short-term. With immediate support at 1.3425 (intraday low), there is scope to a steeper decline with 1.3400/10 as next target. Below this latter, the pair could fall toward 1.3308 (38.2% retracement of the 1.2660/1.3710 rally) with not much in the way.

Backing to the EURUSD, the pair is losing 0.05% at 1.3450 and a dip below 1.3428 (low Feb.13) would aim for 1.3364 (low Feb.12) and finally 1.3325 (low Feb.11). On the flip side, a breakout of 1.3437 (MA21d) would expose 1.3489 (MA10d) en route to 1.3520 (high Feb.13).
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