FXStreet (Bali) - EURUSD’s weak performance last week confirms the bearish outlook for the single currency in the near-to-medium term, notes TDS.
"Having broke consolidation support at 1.3335 (bear wedge on the daily chart, above), we expect EURUSD to stage a repeat of the 1.3697/1.3335 move down from the breakdown point (targets a fall to the high 1.29s)."
"The one caveat to the short-term bearish view we have is that we don’t usually like to see big, bearish ranges (like Friday’s) after an extended move down; these sorts of signals sometimes reflect a “selling climax”, leaving little additional selling pressure to drive markets lower."
"The “gappy” nature of the losses seen through early Asian trade today is another such signal. There is a risk of a short-term squeeze higher but we but rather think strong, bear trend momentum will keep EUR rebounds limited (high 1.32/low 1.33s) from here. We remain bearish; look to sell rallies."
"The bigger picture technical backdrop supports the outlook for more EUR weakness in the weeks ahead. Spot has lost support defined by the 1.3229 Fibonacci level (61.8% of the past year’s rally) which should pave the way for a test of the 1.30 area."
"We note (and like) the alignment of the DMI oscillator across a range of timeframes (short, medium and long-term charts) which implies (to us) limited scope for counter-trend corrections. The weekly chart continues to look somewhat head & shoulder-ish (albeit with a rather under-developed right-hand shoulder). The pattern implies a drop to 1.2810 and firm weekly resistance in the low 1.35s."