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Forex: EUR/USD recovers early losses and closes above the 1.3060

FXstreet.com (San Francisco) - After declining from the 1.3070 area to the 1.3015 in the European session, the Euro managed to recover ground against the US Dollar with the pair bouncing to trade back above the 1.3050. Currently the EUR/USD is trading at 1.3065, almost flat on the day but slightly bullish according to the FXstreet.com's trend index.

In the 1-hour timeframe, indicators such as CCI and Momentum are pointing higher while the MACD is neutral and the Stochastic is bearish. As for the short term, a break above 1.3130 (high Apr.19) would open the door to the 1.3202 (high Apr.16) and then the 1.3229 (50% Feb-Apr slide). On the downside, next support is at 1.3015 (low Apr.22) followed by 1.3001 (low Apr.17) and finally the 1.2969 (MA21d).

Heat Map euro dollar

According to the FXBriefs.com analysts, "middle Easter buyers have been seen the last several days on dips, presumable diversifying dollar reserves." In this line, "small sellers next eyed at 1.3070/75; better sellers toward 1.3100." FXBriefs.com concludes that "these numbers are getting a bit repetitive since we’ve been flogging around in a 200-pip range for two weeks."

Rabobank affirms that EUR shorts continued to retreat. According to the last CFTC COT report, Strategist Jane Foley at Rabobank argued that investors continued to scale back their EUR short positions last week. “EUR/USD remains above the 1.30 handle but speculation about the possibility of an ECB rate cut fueled by comments from Weidmann still lingers.”

On the other hand, the FXstreet.com analysts team commented at the bigger picture that "if the selling pressure persists, key fresh demand does no lie until a fair distance below in the 1.2930/1.29 area, as per the April 5th drop-base-rally, a 'level on top of level', which adds weight to a potential rebound if/when the area is reached. Do not overlook 1.30 round numbers on the way down."

Finally, Commerzbank analyst Karen Jones sees the small rebound from 1.3000 as corrective and continues to view the recent failure ahead of the 1.3225/50% retracement as an interim peak. "Key support remains 1.2679/61, this is the 61.8% Fibonacci retracement of the July-to-January rise and the November 2012 low," affirms Jones.

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