Technically, the pair presents a strong bearish potential according to the daily chart, as 20 SMA turned strongly down well above current price, while indicators stand in negative territory, with RSI still heading south despite in oversold territory. Mentioned 1.3475 level has been attracting sellers, as price retraced from there for third consecutive day towards lower lows, so as long as below the level the downside is favored towards 1.3295 November 2013 monthly low. An intermediate support stands at 1.3390, where the pair presents several daily highs and lows from late 2013, early 2014.
Next week, several first line readings from the US will be released, including FOMC Meeting, GDP and employment figures: if the readings support local economic recovery, fresh lows should be expected in the pair, with a break below mentioned 1.3295 exposing 1.3200/30 as probable bottom.
At this point, chances of an upward recovery seem quite limited, mostly because European data has been sluggish and market players still believe the ECB may implement some sort of QE before the year is over. Above mentioned 1.3475 however, the pair may recover 100 pips and test 1.3570/80 price zone, which stands as critical midterm resistance, as it will be only above this last the bearish potential will be reversed.
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