FUNDAMENTAL ANALYSIS
The euro gained strongly amid the new €45 billion bailout package setup by EU leaders. The new proposition improves the risk sentiment in Europe and should support the euro in the short term.
But the long term fundamental outlook in Europe remains fragile. The financial status of other European countries such as Spain and Portugal keeps sovereign risk on the radar. The recent downgrade of Portugal’s and Greece’s credit rating pushes a full recovery to much later.
Economical data only gives mixed signals. The employment situation is particularly weak throughout the eurozone.
TECHNICAL ANALYSIS
The 4-hour shows a strong rebound off the 1.3275 region. the pair retraced back to 1.3585 after achieving a 1.3692 high for the month of April. Given the high volatility of the recent weeks, we prefer to remain neutral for the short term. Only a break above 1.3800 would confirm a new up trend.
The daily chart shows a still healthy downtrend despite the recent up move. The price remains near the 61.8% Fibonacci retracement of last year's up move. on the upside, the 50% level (1.3789) opposes a strong resistance. On the downside, the price bounced twice already off the 1.3260 region.
The long term technical outlook is neutral until one of these level is breached.
Resistance levels:
- 1.3691
- 1.3789
Support levels:
- 1.3459
- 1.3267
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