On a net basis the euro has actually rallied slightly since hitting the low of $1.2357 on 7th November, however in truth this has been a two week period of consolidation. Subsequently it means that I can write different reports every day but the general theme is not really changing. The overriding fact is that the euro is consolidating under the resistance of a 3 month downtrend and the $1.2600 neckline of a head and shoulders continuation pattern. Momentum indicators on the daily chart are unwinding gradually but the fact that this continues to occur without any real price recovery suggests that the indicators are simply unwinding an oversold position and are simply moving to renew downside potential for the next leg lower. The intraday hourly chart basically shows a two week range play with a series of rallies and sell-offs. The key resistance near term remains $1.2577 with support at $1.2441 and $1.2397. With yesterday’s rally rolling over again at $1.2545 expect the range to continue for now.
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