FXStreet (Bali) - According to FX Strategists at TD Securities, EUR/USD daily chart reveals some signs of potential basing which needs to be closely monitored.

Key Quotes

"EURUSD has reached—and exceeded marginally—our 1.3385 bear target derived from the 1.3965 double top. We remain broadly bearish on the outlook for the EUR—trend studies are resolutely bearish and the rollover in the shorter-term MA signals below the longer-term studies supports the generally softer outlook (note the 100-day MA/200-day MA bearish crossover)."

"However, the daily chart does reveal some signs of potential basing which needs to be closely monitored this week. Wednesday’s squeeze off of the low formed a bullish “hammer” signal, suggesting some building, near-term risk of a short-term bounce in EURUSD–something that has not been seen for a month."

"We think the trigger point for a recovery lies at 1.3425/35; gains through here risk extending a big figure or so higher. Wednesday’s low at 1.3340 represents key short-term support now. Below here targets the low 1.32s."

"In general terms, the weekly chart reflects the daily picture above—the EUR remains in a well-defined bear trend in a broad sense but short-term price action hints at the risk of a bounce. The daily “hammer” signal noted above is picked up on the weekly chart as well, with last week’s price action also forming a weekly “hammer”."

"We don’t see much risk of a major turn up in the EUR but we do think the market risks pushing a little higher before the broader move lower resumes. We would still favour looking to sell rallies—through the low 1.34s initially this week—and more aggressively on a bounce to the 1.35 area if it develops."

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