As we look at price action today, we believe the divergence on MACD and RSI show how EUR's bull is losing its momentum.
Technical Insight:
EURUSD will be testing support in 1.3550, which is also a 38.2% retracement from 8 May 2009 and 12 May 2009
Duration: Short Term
Fundamental View
The Euro was hampered to some extent by comments from George Soros who stated that the dollar was not likely to weaken sharply against the Euro given that it is already a relatively weak currency.
ECB President Trichet was still generally very cautious over the outlook for the Euro-zone. He did, however, comment that the global economy was at an important turning point which maintained a firmer underlying attitude towards risk appetite. Although international stock markets were generally weaker over the day, there was still support for the notion that the retreat was corrective rather than signalling a serious deterioration in confidence.
In this environment, there was still solid Euro buying on dips with the BIS also reported to be buying the Euro towards the 1.3550 level.