Forex Flash: What lies ahead of EUR/USD? – Commerzbank, BTMU and Danske Bank

The bloc currency is extending its intraday decline on Tuesday, falling to the area around the key support at 1.3480 from yesterday’s tops in the proximity of 1.3660, as renewed debt woes were hovering over the euro zone.

After Monday’s sell-off, Karen Jones, Head of FICC Technical Analysis at Commerzbank, commented, “The pullback has tested the accelerated uptrend at 1.3484 and this is starting to look exposed… Below 1.3480 would suggest a deeper retracement towards the 1.3270/56 zone… It is too early to say whether this was a false break above 1.3485/1.3564 and for now we will assume it is a correction lower”.

“At present the euro’s recent drop is more likely a correction following recent strong gains, although the price action supports our view that the majority of the downside tail risk has now been fully removed from the euro at current more elevated levels leaving risks to future direction more balanced”, commented Lee Hardman, Currency Analyst at BTMU.

In addition, Lars Christensen, Chief Analyst at Danske Bank, suggested “However, in general, we do not think we are in for a major trend reversal for the euro and believe the current euro corrections give some attractive opportunities to go long the euro against the three other majors”.