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Technical analysts at JPMorgan Chase & Co. claim that the single currency may drop below $1.30 for the first time since September after it formed reversal model “outside down day”.

Yesterday euro set intra-day maximums and minimums that surpassed levels from the previous session and closed 0.3% lower pointing at further declines.

The specialists suppose that if the pair EUR/USD breaks down through last week’s minimum at $1.3448, it would fall down to $1.32 zone representing support of the uptrend line from the June 7 minimum at $1.1877, the weakest since March 2006. If European currency fails at this level, then it’ll slump to $1.29 level at which it traded last time on September 14.

According to JPMorgan, the attempts of the market to get higher mean that the bulls are too weak and that the rate risks dropping more.



Chart. Daily EUR/USD

Currency strategists at RBC none that the European currency would probably have to struggle hard in order to keep the gains it made since investors became optimistic on Ireland’s bailout.

In their view, providing the country with a loan won’t solve all its problems. The specialists note that the region’s economic fundamentals aren’t quite encouraging. According to RBC estimates, Portugal will also have to ask for financial help by February 2011 at the latest.

The pair EUR/USD is declining today from the level of $1.3786 reached yesterday, the maximal since November 11.



Chart. H1 EUR/USD

Technical analysts at Mizuho Corporate Bank note that US dollar retested November’s maximum at 83.79 which is also first Fibonacci 61% retracement resistance. The specialists note that the rate is slightly above the top of the daily Ichimoku Cloud, while the moving averages suggest a long position.

Never the less, Mizuho strategists regard the latest advance of the pair USD/JPY as corrective and expect correction and consolidation to last 1-3 weeks. The greenback seems to be strongly overbought, so the pair is likely to cap during the mentioned period and start declining again.

According to the bank, it’s necessary to take small shorts at 83.75 stopping above 84.05. The rate may lower to 83.25 and then to 82.00/81.65.



Chart. H4 USD/JPY

Currency strategists at UniCredit note that the greenback may advance more on North Korea and Ireland.

Investors increased today demand for US dollar and Swiss franc as safer currencies after as artillery fire between North and South Korea began by the former. The single currency was weakened by the concerns that Irish elections will hamper bailout negotiations.

The pair EUR/USD went down from 1.3633 to the day’s minimum at 1.3525, while EUR/CHF – from 1.3490 to 1.3379.

UniCredit specialists are looking forward to the upwards revision of US GDP forecast from 2.0% to 2.4% later in the day.

However, the bank warns that dollar’s advance may be limited by the FOMC minutes in case the Fed calls raising core inflation its key goal.



Chart. H1 EUR/USD

Technical analysts at Commerzbank claim that it’s now absolutely clear that the latest advance of the single currency versus the greenback was nothing but a correction. Yesterday euro’s rebound from 1.3445 faltered at the 20-day MA at 1.3794, so that the pair EUR/USD went down below 1.3600.

Even though the chance a retracement into the 1.3865/1.3965 area can’t be excluded, its possibility has significantly reduced.

The general trend for the pair is bearish. The European currency is poised to 1.3365/35 support (38.2% retracement and the August peak) then to 1.3138 (200-day MA).



Chart. H4 USD/JPY

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Technical analysts at Commerzbank note that the pair USD/CHF keeps consolidating below the psychologically important 1.0 level. The recent down moves of the rate were modest enough to suggest that the greenback has all chances to climb this week. The key support for US currency is found at 0.9780.

The specialists regard the current pattern as a potential base. In their view, if USD/CHF closes above 1.0 it will rise to 1.0329 on its way towards 1.0480.

Chart. Daily USD/CHF

The single currency fell sharply versus the greenback from the Monday’s maximum at 1.3785 and slumped today below its initial downside target of 1.3365/35 hitting 1.3284 low so far. Analysts at Commerzbank expect the pair EUR/USD to consolidate before resuming the longer term downtrend.

The specialists believe that the next euro’s downside targets lie at 1.3230 (6-month support line) and 1.3136 (200-day MA). According to Commerzbank, the rate of the European currency won’t be able to get above 1.3525/1.3625. The bears will dominate the market below the channel at 1.3701.

Chart. H4 EUR/USD

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