EUR/USD has been quite volatile yesterday: the pair was trading in the $1.3265/3370 range. Euro has twice tested the levels below $1.3300, but returned back. Today the pair is trading on a downside and once again testing $1.3300.
In a long-term we still stay bullish, but for now the technical picture shows there is some room for downward correction. Euro is now trading very close to an 11-month high of $1.3405. Let’s have a look on a weekly chart: the pair is struggling to overcome the 200-week EMA ($1.3345) and fix above the weekly Ichimoku Cloud ($1.3300). On a monthly chart growth is contained by the 50-month EMA ($1.3370). The pair is trading at the lower boundary of the strongly negative monthly Ichimoku.
Investors remain indecisive ahead of these resistance levels even despite the improving risk sentiment and evident progress in euro zone. It seems that they need some time to prepare psychologically for a break of $1.3400. EUR/USD could extend the downside to the $1.3200 support or even to $1.3150. We would expect euro to bounce from there and to resume growth. We have already seen a similar scenario in late December 2012. The next upside targets are seen at $1.3400, $1.3480 and $1.3500.