FX Weekly Update
The daily support line drawn from 77.652 (June 1 low) to 78.609 (June 15 low) is losing relevance with the likely hood of continued sideways movement around this level. While the pair stalled around the low limit of the daily cloud, the support line is turning into a resistance line as the dollar rose up to 80's.
Even as it fluctuates in the daily Ichimoku cloud (there is also a support line at 79.20), it will slump significantly if the dollar break below 78.90 (low limit of daily Ichimoku cloud) and 78.951 (200 days MA). There is potential to sell from 80.5 - 81.
Expected Range: 78.350-80.850 Likely to fall below the lows. Sell on the rallies
Since NFP was lower than expected, investors have turned to 'risk off' and as a consequence EURUSD continues to experience pressure on the downside. Moreover, stop orders below 1.2350 were triggered, and it fell below June 1 lows (1.22863) to 1.22598. The next support will be on May levels and June 2010.
May 16 2010 low 1.21440
May 23 2010 low 1.21530
June 16 2010 high 1.21520
June 13 2010 low 1.21120
June 27 2010 low 1.21510
Even though there is a support line at 1.2150, if the euro falls below this level, it may slide to 1.18760 (June 6 2010) or even 1.16360 (Nov 1 2005). Debt problems of Spain and other countries in the euro zone will continue to pressure the euro in the future.
Expected Range: 1.19500-1.25500 Sell on the rallies. Place a firm stop order if you buy.
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