Resistance: 1,3950/ 1,3990-00/ 1,4100-20/ 1,4160/ 1,4200-10/ 1,4260
Support: 1,3850/ 1,3800-10/ 1,3775/ 1,3730-35/ 1,3690/ 1,3630-40
Comment: The year begins with euro in a consolidation, after the sharp rise of December, remaining in levels that still confirm the upward expectations. The first week of the year starts with important economic announcements. ISM non-manufacturing on Tuesday, Fed's meeting minutes on Wednesday and Non Farm Payrolls on Friday should influence the market and cause important reactions.
The retracement of the rise is limited at 38,2% indicating strength, while we can see that euro has formed a base at 1,3800-20, in a short term consolidation.
Our basic scenario sees euro in a rise to previous tops or to new tops and retracements should be limited at 1,3400. We will cancel this scenario in case of a move below 1,3250.
Regarding the short term, a move below the base of 1,3800 should meet sellers, that are likely to lead euro towards 1,3730-35 area, while a clear break could lead to our next targets at 1,3620-30 or 1,3550 area.If the base of 1,3800-20 is confirmed once again, bulls should gain momentum towards 1,3950-4000 area. A break of these levels would have as next target the area of 1,4100-20 and 1,4230-50, indicating that the move within the sideways consolidation will be continued.
Finally, regarding the longer term, dollar should remain vulnerable in the first months of the year, due to interest rates that are close to zero and foreign investors' skepticism . Volatility during 2009 should be high, while in the second half of the year dollar should gradually gain momentum...
We will try buy orders at the base of 1,3800-30 with stops below 1,3770, with target at 1,3960-70.
A clear break of 1,3800 may be followed by sell orders and target at 1,3730-35 or 1,3650 area.
Alternatively, the area of 1,3980-00 could be used for sell positions, only after reversal signs... A clear break of 1,4000, could be used for buy orders with target at 1,4100-20 area...
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