EUR/USD is losing traction: the pair set lower highs and is failing to rise within a narrowing channel. Without a break of downtrend resistance or a challenge of the 1.34 line, we could see it move to the downside – the path of least resistance.
As the chart shows, there is some uptrend support, currently around 1.3270. The more distinct line is downtrend resistance, which has been seen more than once: The recent touch of this line shows that the line, currently at 1.3350, is quite strong.
Euro/dollar failed to conquer the critical 1.34 line, after many attempts. On the downside, 1.3250 and 1.3280 are the critical lines before the all-important 1.30.
The euro has been hurt by comments expressing worries about its strength. The recent weakness of the yen (a stronger EUR/JPY) hurts European competitiveness at a time of a deepening recession.
Spain, the euro-zone’s fourth largest economy, reported another quarter of economic contraction, continuing its recession. The country’s economy squeezed by 0.6%, a significant drop.
The bigger worries are about Germany, which saw a drop in forecasts for 2013. For more about the single currency, see the euro to usd forecast.
