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Forex pairs in this Article » EUR/USD
FXstreet.com (Barcelona) - The key market theme during Thursday was the poor data in Europe, where a sequence of worse-than-expected GDP figures in France, Germany and the Euro zone as a whole, came as a 'shock' for those speculators trying to reverse the growing short-term bearish outlook in the pair. the Euro underperformed across the board, tumbling around a cent.

Shocking, term we use in the first paragraph, is not a word often used in a financial summary, says Greg McKenna, chief investment officer at GlobalFX, "but the data really was horrible" he notes.

Greg adds: "German GDP contracted a worse than expected 0.6% but it was the export engine particularly exports to the rest of the Eurozone that is clearly spluttering. French, Italian and Portugeuse GDP were equally all weaker than expected falling 0.3%, 0.9% and 1.8% respectively. Overall Eurozone GDP fell 0.6% in Q4 2012 and the year on year fall was 0.9% for 2012."

Earlier this week we had been arguing that lack of negative drivers in the Euro was a double-edged sword for sellers eager to join the ongoing short term bearish momentum in the Euro, as perception around the market was that further catalysts were needed to jeopardize the very pillars of a still daily uptrend, so that a greater number of long players rethink their strategies.

Amid the disappointing data out of Europe, and the development of a new leg lower near 1.33, looks as though reasons are mounting to think that sellers have got the upper hand, short term talking. As Sean Lee, founder at FXWW notes, looks like one thing is getting clearer, and that is, "today will be all about positioning and things could get very volatile so be careful" he says.

Technically, Fan Yang, currency analyst at FXTimes and contributor at FXstreet, notes: "There remains short-term bearish correction outlook against a bullish trend that started in July 2012. The next support area is around 1.3255, around the lows from an earlier January consolidation."

From a broader perspective, "the market remains bullish in the daily chart until a break below the rising trendline going back to July" Fan notes. A return above 1.35 should neutralize the bearish outlook, "possibly suggesting resumption of uptrend" he said.

A second opinion was shared by David Solin, partner at FXA, saying that bearish signs near term are back, "and with the short term downside pattern not complete suggests further downside ahead" he said.

However, such a break lower, in view of David, "would likely be part of the correction from the Feb 1st high at 1.3710 and not the start of a more major, new decline; so for now would be short ..." He tips supports at 1.3300/10 and the bullish trendline from Nov (currently at 1.3250/60).
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