Forex: EUR/USD settles in range below 1.2800

FXstreet.com (Córdoba) - Following a short-lived rally that took EUR/USD briefly above its 200-day SMA to a high of 1.2876, the shared currency came under strong selling pressure amid Draghi’s comments and also weighed by the deterioration in market sentiment.

EUR/USD lost over 140 pips from highs and set a fresh 2-month low of 1.2735 at the beginning of the American session before stabilizing in a narrow range where it has spent the last hours. With bounce attempts being capped by the 1.2775 area, EUR/USD is currently trading at the 1.2760 zone, 0.4% below its opening price.

"Return below 200 day MA and psychological 1.2800 support, with today’s close below here, would be a good signal for stronger correction of 1.2042/1.3170 rally, after the pair lost 1.2800 5-week range floor and negative daily studies keep the downside favored", says Slobodan Drvenica, analyst at Windsor Brokers Ltd. "With initial target at 1.2740, mid-June highs and Fib 38.2% being cracked, near-term focus turns towards round figure support at 1.2700 and 90 day MA at 1.2642, another significant support at 1.2600, 50% retracement and daily Ichimoku cloud base, would come in focus on a break below 1.2700/1.2642".

"On the upside, only break through pivotal 1.2880/1.2900, would provide relief", the analyst adds.

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