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Forex: EUR/USD, more danger to the downside – FXWW

FXstreet.com (Barcelona) - EUR/USD is last at 1.2864, retracing from a spike higher during mid NY trade to 1.2924, and off previous weekly and fresh 4-month lows at 1.2842. The pair has resumed the downside started at the very weekly open, losing by now a -1.64% for the week so far. The SP500 also closed lower for the day by -0.24%, while US 10 year note yields fell to 1.92% from previous 1.96% as demand for safe havens piled up.

“Heavy selling by asset managers was the main story overnight in the EUR. The beginning of the year was marked by a big asset flow back into peripheral EZ debt as the market hoped to have seen the back of all EUR worries. The developments in Cyprus have frightened many people again and it’s little wonder to see the assets flowing out again,” noted FXWW founder Sean Lee, adding: “The USD and JPY have been the main winners but all EUR crosses have moved lower.”

“EUR/USD broke below important technical support at 1.2870, 50% retracement, daily lows, and 200-day MA,” the analyst expands, suggesting that: “Despite the fact that the market will close back above there, I still see more danger to the downside given the switch in asset flows. The next downside technical target is a big support level (weekly lows and 61.8%) at 1.2680. The chances of getting a gap closure back to 1.3050 are looking increasingly unlikely,” Sean concludes.

Forex Flash: Next headlines on Cyprus to provide a sense of timelines - TDS

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