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

The single currency is navigating below the key resistance at 1.3100 on Tuesday, as news coming from the Italian election is the main driver of the markets absent docket in the euro area.

“A period of prolonged political uncertainty in Italy poses downside risks for the euro in the near-term although unstable politics in Italy is not exactly a new phenomenon which with time the market may become more comfortable with as the ECB is still standing behind the debt market”, explains Lee Hardman, Currency Analyst at BTMU.

G.Yu and G.Berry, Strategists at UBS, remain neutral on the cross, adding, “The next support is at 1.2998, a break below this would expose 1.2877. Any upside in the near-term will be limited and resistance is at 1.3319”.

In addition, Karen Jones, Head of FICC Technical Analysis at Commerzbank, comments, “We have an initial downside target to 1.2679/61, this is the 61.8% retracement of the move up from July 2012 and the November 2012 low. Initial support at 1.3075/3, the 38.2% retracement of the same move has already been reached. Next support is this years low at 1.2998 then 1.2885/76 – the 7th December low and 78.6% retracement”.

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