FXstreet.com (Barcelona) – EUR/USD has been moving to higher ground along the Asian session, correcting an early downside gap at 1.2875, after the market resumed its short speculative bets on the assumption that Portugal will likely need to resort to a rescue package in order to put its finances in order. Eventually, despite sovereign woes, today’s bottom stood at 1.2875, and Euro was knocked back up to a daily high at 1.2925, before a retracement sent the price to 1.2915, current level.
Short term talking, Franco Shao, Chief Strategist at ForexCycle.com said: “EURUSD’s downward movement extends to as low as 1.2885 level. Deeper decline is still possible later today and next target would be at 1.2750 area. Initial resistance is at 1.3025, only break above this level could indicate that minor consolidation of downtrend is underway, then bounce to 1.3100-1.3200 area could be seen”
From a longer perspective, Chris Turner, Head of FX at ING had it take in an exclusive interview at Reuters Insider: “Euro-Dollar fell from about 142 to 132 during this period of Q1. There probably quite a few people out there that are expecting the same thing to happen. We actually think any break below 130 may only be temporary and our main reason behind that is the fact that we think the Fed will definitely keep its quantitative easing policy continuing through to the end of June”.
“Obviously a weaker Euro and trying to isolate the Eurozone risk is quite difficult but on balance we think Euro-Dollar will crawl from below 130 and move back up to 135 by the end of Q1 and up to 140 in the summer. If Eurozone policy makers aren’t clever enough or quick enough to really address problems before they move on to Spain, then I’d say we could Euro-Dollar down at 120 or below. But that’s not our key base line story”.