Although below the key 1.2965 level, EUR refuses to break lower and is now threatening to trap short on a break back through the old support level. We view the action this month as just a correction of the initial sell-off from 1.37 and following another rally we expect the longer-term trend to turn down again. S/t, the choppy A-B-C pattern from 3/8 calls for a strong rally through channel resistance with a target near recent highs of 1.3107/34. At a minimum a rally to 1.3089 is expected to complete this correction near-term. A break below 1.2889 negates the bullishness and argues for a further decline. Levels: Support – 1.2891, 1.2844 Resistance – 1.2965, 1.3000, 1.3089.
Nomura