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EUR/USD, another ‘dead-cat bounce’?

FXStreet (Edinburgh) - The weakness around the single currency is now accelerating, dragging the EUR/USD to test recent lows in sub-1.2850 levels although rebounding to the 1.2865/70 area later.

EUR/USD depressed by USD strength, ECB

The selling interest intensifies around the EUR on Friday, as the US dollar continues its march north, taking a toll on the pair. Coupled with the current USD rally, disappointing figures from yesterday’s first TLTRO by the ECB - with banks only taking €82.6 billion - continue to weigh on EUR, as it seems the central bank might need to implement another easing measures (QE?). Camilla Sutton, Chief FX Strategist at Scotiabank, commented, “We expect EUR to drift lower; expecting building downside pressure in EURGBP as its trends towards its 2012 low of 0.7755”. Sutton also added that the technicals remain mixed, “but if today’s close is below the low of 1.2835 it would warn of further downside pressure building. Support lies first at 1.2835 followed by 1.2800; while resistance comes in at today’s open of 1.2923”.

EUR/USD levels to watch

The pair is now retreating 0.41% at 1.2868 and a breach of 1.2834 (low Sep.17) would target 1.2788 (61.8% of 1.2042-1.3995) en route to 1.2755 (low Jul.9 2013). On the upside, the initial hurdle aligns at 1.2931 (high Sep.18) ahead of 1.2982 (high Sep.17) and finally 1.2995 (high Sep.16).

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