A client note via Credit Suisse on the euro, specifically the sell off in EUR/USD seen on Friday and its implications.
- Even though EUR/USD managed to move briefly above 1.1900 on Friday strength was not sustained and the subsequent sharp retreat has seen the market close the week back below the long-term downtrend from the 2008 peak at 1.1797.
- This suggests the rally has become exhausted near-term and although our core outlook stays bullish, we now look for a consolidation/correction to emerge.
CS add their view on S/R ahead, noting that a fall through 1.1734/31
- should see weakness extend back to the 13 -day average at 1.1655, potentially the 38.2% retracement at 1.1627/22, but with this latter support then ideally holding
- Post a pullback we would look for the uptrend to resume with resistance seen at 1.1797 initially and with 1.852/63 needing to be cleared for a direct move back to 1.1904/09. Above here in due course should see strength extend to our first major flagged resistance at 1.2145/55
