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Forex: What a trip! The EUR/USD close the quarter at 1.2800

FXstreet.com (San Francisco) - 960 pips epic decline. The EUR/USD opened the year at 1.3185, in January the pair advanced more than 500 pips to the 1.3575 level and in the first day of February, the Euro even advanced to the highest since November 2011 at 1.3710 but suddenly something changed.

After Draghi and company was showing euphoria in the beginning of the year, they switched into the dark mode and the pair fell to test the 1.2750 level, in an impressive 960 epic two months decline. Currently the EUR/USD is trading around 1.2820 on Good Friday. News from Cyprus and now from Italy has hurt the pair that it seems to be set to continue the bearishness.

The EUR/USD traded sideways the whole Friday's session, moving between 1.2810 and 1.2835. The pair closed the session 0.03% positive at 1.2820. As for the short term, it will face the next hurdle at 1.2884 (MA200d) en route to 1.3050 (high Mar.25) and then 1.3163 (high Feb.28). On the flip side, a breakdown of 1.2804 (low Oct.2012) would open the door to 1.2751 (low Mar.27) and finally 1.2730 (low Nov.19).

What's next?

According to the FXstreet.com Forecast poll, the EUR/USD is negative, but not that much. Despite latest developments in Europe, our pool shows that a large majority expects the pair to remain above 1.25 and resume the upside later this quarter. The poll expects the EUR/USD finishing the next week at 1.2815 and the month at the same region at 1.2849. The picture is different in the 3-month target with the 1.3128 as target.

But Societe Generale states that the EUR/USD remains bullish above 1.2660/20. “Our technical analyst sees that only a weekly close for EUR/USD below 1.2660/20 would negate the bullish pattern arising from the June 2012 to January 2013 rally. Our quant USD positioning indicator remains firmly in long-USD mode”, explained the research team at Societe Generale.

BTMU agrees with that as they thinks that the EUR/USD looks bullish ahead. Bank of Tokyo Mitsubishi UFJ analysts are bullish on EUR/USD for the week ahead and see spot moving between a range of 1.2650-1.3000. The bank believes that the fears over Cyprus will recede and the focus will shift to Italy. "“We may also get some movement toward the Italian president appointing an interim prime minister which would alleviate fears over political uncertainty in Italy."

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