Another day and another monthly low in the EUR/USD. It wasn't a good day for EUR: The common currency hit its lowest level in over a month against the greenback, testing 1.2841 on the back of disappointing GDP readings in France, Germany, and the EU itself. In the middle of the session, worse-than-expected economic data in the U.S. provided some respite to the pair. However, the dollar continues to build a bullish trend and, consequently, the EUR/USD reached fresh lows.
The pair closed 0.30% negative on the day at 1.2880, and short-term perspective is slightly bearish according to the FXstreet.com trend index on the one-hour chart. CCI indicators are bullish, while the momentum is bearish and MACD is neutral. "In the four-hour chart, technical readings maintain a strong bearish momentum, supporting the shorter-term view," FXstreet.com's analyst Valeria Bednarik commented, "with [the] market now eyeing 1.2744, this year['s] low."
The next bearish target stands at 1.2744, which is the 2013 low scored in early April. A break below this would pave the way for a dip toward 1.2660 (the November 2012 monthly low). On the other hand, the EUR/USD needs to at least regain the 1.3000 level to ease immediate pressure.
In a wider chart, UBS analysts see the EUR/USD falling to 1.2600 in three months: "The EUR/USD fell below 1.29 on the news. If anything, the very slow stabilization into the second half of the year should increase the ECB's focus on more accommodative monetary policy measures." They continued, "We thus keep our EUR/USD forecast at 1.26 in three months."
The Saxo Capital Team agrees with Bednarik and the UBS team as they believe that the 1.2930-40 support break "opens up for a possible go at the bottom of the range toward 1.2750, and possibly even 1.2660 if we look further back at the lows from last November."