Flash: What does the EUR/USD have to offer? – Societe Generale and Commerzbank

FXstreet.com (Edinburgh) - The EUR/USD is now extending its correction lower, trading around 1.3320/25 after hitting the boundaries of 1.3390 before the opening bell in London. Despite the correction, the shared currency keeps the bull run sparked in late May, when it was trading in the 1.2800/30 range.

In the opinion of Sebastien Galy, Strategist at Societe Generale, “As G3 rises by default vs. EM, the temptation to ease (ECB negative rates seem a high probability event and is EURUSD negative) or calm down the markets (Fed) rises. Overall it suggests picking higher levels to sell EURUSD as underestimating the ECB is not a winning proposition. A correction in credit would also be unhelpful for EURUSD given that it has risen on a combination of tighter credit and recently higher core rates”.

Axel Rudolph, Senior Technical Analysis at Commerzbank, commented, “Short term the mid-January high at 1.3404 is being targeted. Above this level will see an extension to 1.3454/57, the 200-week ma and the 2011-2013 resistance line. We look for this to hold and provoke failure”. The expert added that a breach of the uptrend (1.3273) and Monday’s low (1.3177) would be needed to allay the upside pressure.