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EUR/USD finds again support at 1.2165

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EUR/USD moved slightly lower on Friday after hitting resistance at 1.2220 (R1). However, the slide was halted by the support barrier of 1.2165 (S1), marked by the low of last Tuesday. Given the inability of sellers to dominate and overcome that hurdle, I would be cautious of a possible upside corrective move before the next leg down. Our near-term momentum indicators support this notion. The RSI moved slightly higher after finding support above its 30 line, while the MACD, although negative, stands above its trigger. On the daily chart, the price structure still suggests a longer-term downtrend. We have lower highs and lower lows below both the 50- and the 200-day moving averages, hence I believe that the overall path of EURUSD remains to the downside. A move below the 1.2165 (S1) line is likely to lead the rate towards our next support zone of 1.2130 (S2), defined by the lows of 2nd of August 2012. Besides these technical signs, we need to bear in mind that today we have the final round of the Greek presidential elections. If the ruling party’s candidate fails to gather 180 votes in parliament, this will automatically lead the country to a snap elections. In such a case, an upside corrective move may never occur and we may experience the aforementioned down leg earlier than under normal circumstances.

• Support: 1.2165 (S1), 1.2130 (S2), 1.2040 (S3)

• Resistance: 1.2220 (R1), 1.2300 (R2), 1.2345 (R3)

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