Despite the greenback trading lower against its majors competitors, the EUR/USD continued moving sideways, as the euro doesn't have enough punch on the back of the Cypriot crisis and the Dijsselbloem statements on templates, Cyprus, savings and other reflections.
The EUR/USD traded sideways on Tuesday, with the pair moving between 1.2840 and 1.2880. The pair closed 0.08% positive on the day. The mood is consolidative after Monday's declines, but is it happening because of the dollar breather or the euro weakness? Nevertheless, the Cyprus situation is capping the single currency.
Meanwhile, the market is concerned about the banks opening on Thursday, as Cyprus could experience a money overflow. "As of now, banks in the country will remained closed until Thursday, as authorities fight against the clock to prevent a bank run once they open," comments FXstreet.com analyst Valeria Bednarik.
"Short term, however, the pair maintains a neutral stance according to the hourly chart, with price around 20 SMA that lost the bearish momentum and turned flat, and indicators hovering around their midlines. In bigger time frames bias remains to the downside, although a break below recent lows around 1.2825 is required to confirm the movement, " she added.
On the wider chart, RBS analyst Greg Gibbs continues "to favour more downside in the EUR, and continues to see risks of some contagion to global markets, although there is clearly a higher hurdle for this to hurt global investor confidence. Today we see topside for the EUR likely to be limited to around 1.29 and look for a further decline towards 1.26 in coming sessions."
Strategist Camilla Sutton at Scotiabank suggests, "Looking ahead, problems within Europe are likely to subject deposit and bond holders to bearing an increasing burden, shifting the risks of these investments." Sutton agrees with Gibbs, as she says that "accordingly, EUR is weak on all measures, and outflows are likely to continue… We expect EUR to trend lower and hold a year-end target of 1.27."