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EUR/USD: Further declines towards 1.2370 expected - FXStreet

FXStreet (Bali) - EUR/USD is trading lower in Asia, presently barely holding above the 1.25 area, with Valeria Bednarik, Chief Analyst at FXStreet, noting that further declines towards strong midterm support at 1.2370 are now expected.

Key Quotes

"Dollar gaps higher across the board, still the king among currencies: last week, not only FED finished for good its QE plans, but BOJ unexpectedly increased the pace at which it expands base money to about ¥80 trillion a year, fueling dollar rally against mayor rivals: stocks soared across the world and US 10Y yields spike above 2.30% back from year lows."

"For the upcoming days, the ECB will made its announcement of its economic policy, while the US will release its employment monthly data, both set to confirm latest dollar strength: as for the ECB, the European Central Bank does not have much more to do to boost local growth expect lunch QE, which will only widen the imbalance with the US economy; as for US employment data, latest subcomponents in mayor readings along with weekly unemployment claims steady near multi year lows for the last 5 weeks, which suggest another month of strong jobs creation."

"Technically, the EUR/USD trades near 1.2500, having posted a year low of 1.2485 last Friday and with the technical picture supporting further declines: the 1 hour chart shows price well below a bearish 20 SMA and indicators turning south deep in the red after barely correcting oversold readings. In the 4 hours hart indicators present a strong bearish momentum, heading still south despite in oversold territory: further declines towards strong midterm support at 1.2370 are now expected, with recoveries up to 1.2580 seen as selling opportunities."

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