Tuesday, May 29, 2012
EURUSD: Take a break…
The EURUSD not just reached the 1.26 level foreseen by us on 4 May, but – with a hasty movement - it went until 1.25. Now it seems to take a break as polls show that New Democracy, the pro-bailout party of Greece might win the elections to be held June 17. From the technical analysis point of view the RSI, standing at 20 on Friday, marked an oversold euro and it is still below the critical 30 mark (27 at the time of writing). Moving averages are at light years.
We expect therefore a correction until 1.262 (the MACD is already preparing to turn back higher), as the former support level might work now as resistance. Strong commitment of the leading euro zone countries to save debt burdened peripheral economies might help further until 1.282. An earlier local low and the 20-days moving average can be found here.
On the other side, the main trend shows USD appreciation on the long term and new fears coming from the other side of Southern Europe, namely from Spain might give a new impetus for the EURUSD to continue on the downward slope.