EURUSD UPDATE: Possible Bottom in EURUSD???

[RTFX-Trading]

The EURUSD fell to its new year low today at 1.3112. The situation from a fundamental point of view remains bleak for the Euro with the EU/IMF aid package for Greece in the weekend failing to provide the desired support. However, with economic data showing signs of improvement across the globe, the possibility of a return to risk appetite in the foreign exchange market is not to be dismissed. This could provide support to EURUSD. With important events ahead, specifically the ECB meeting on Thursday and employment figures from the US on Friday, we should have a clear indication of price action in the coming months.

From a technical point of view, conditions on the daily EURUSD chart now look extremely oversold. Bullish Divergence is seen on the RSI (14) indicator, which is failing to register new lows since February 8th, despite price action falling to new lows repeatedly since then. A failure to close below 1.3114 should indicate a rebound in the short term, to see price move up to test resistance levels around 1.3400 in the short term.

Only a break above 1.3800 would indicate a change of trend in the medium term. On the downside, while 1.3000 offers some formidable psychological support, 1.2885 represents the low from April 2009. Therefore we would expect a test of the 1.2885-1.3000 area should we see a daily close below 1.3114. Also coming in by 1.3000 is a key 78.6% fib retrace of the major 2008-2009 move.

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Emman Xuereb
Trading Desk
RTFX Ltd
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