FUNDAMENTAL ANALYSIS
A lack of interest in Greek long term debt pressured the euro off its highs. Traders question the government's capacity to finance its debt by itself and bet that it will have to rely on the EU bailout.
Earlier this week, the euro gained strongly after EU leaders proposed a €45 billion, 5% interest package which involves a €15 billion contribution from the IMF.
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 euro retraced from its 1.3678 high and is back under 1.3600. The 4-hour chart shows a strong downward momentum which could indicate an expansion of the down move towards a re-test of the 1.3460 support level.
A break above 1.3700 would push the price towards a re-test of the March highs at 1.3789.
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 is supported at 1.3260.
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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