Forex Flash: What lies ahead of EUR/USD? – Commerzbank, Westpac and UBS

FXstreet.com (Barcelona) - The single currency is trading on the back foot on Tuesday, partially retracing Monday’s gains and hovering over 1.2830/35. The lacklustre results from the manufacturing PMI in the euro zone members plus the record high unemployment in the euro area are plotting against any attempt of recovery beyond 1.2880, tested overnight.

Karen Jones, Head of FICC Technical Analysis at Commerzbank, comments the cross “has spent the past few days consolidating below its 200 day ma and as a consequence maintains a negative bias. It remains on course for 1.2679/61, this is the 61.8% Fibonacci retracement of the July-to-January rise and the November 2012 low meet”.

“Softer US data has provided some relief for the euro but Italy’s political debacle remains some way from resolution. ECB’s Draghi will struggle to maintain a positive tone on Thu. We remain short EUR/USD from 1.3021 (1mth target 1.25)”, assessed Sean Callow, Strategist at Westpac.

In addition, Strategists G.Yu and G.Berry at UBS, remain bearish on the cross, arguing, “Strong resistance at 1.2900 and 1.2935 should hold any upside. The risk is for rejection and resumption of weakness. Support is at 1.2751 ahead of 1.2662“.