The shared currency came under renewed pressure on Friday as technical rejection from the 1.3400 level discouraged buyers and sent EUR/USD tumbling back below the 1.3300 mark during the New York session.
"While this week's trading activity has been somewhat uneven, the market's mood remains constructive overall, and we maintain a slight bias towards foreign currency strength in the near-term", says Nick Bennenbroek, Head of Currency Strategy at Wells Fargo Bank.
Euro falls back below 1.3300
The technical failure at 1.3400 has sent EUR/USD back below the 1.3300 psychological level and opened the way for a retest of the 1.3250 area, which represents this week lows and the neckline of a double top formed by Jan 14/18 highs. A break below 1.3250 would turn the near-term-picture more bearish, although the longer term outlook remains constructive.
The TD Securities team shares the view that technicals and positioning are mainly driving price action. "Without any fundamental developments, EUR price action has focused on positioning adjustment and EUR/CHF is in the spotlight at the moment. After reaching a fresh high of 1.2570, the pair has pulled back somewhat but the trend higher still appears intact", TD Securities says. "That move helped EUR/USD test, but not pierce above the 1.3400 level, before entering what looks to us like more range-bound trading on the short term charts".
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