Following a prolonged downward trend, the EUR/USD has established a strong support at 1.28, even completing a double bottom pattern on the daily chart. Looking at the long-term, the ongoing weak fundamentals out of the euro-zone, along with a steadily improving US economy are not expected to have a significant impact on the pair. Far more important will be the mood among investors if, when and how the US Federal Reserve will end its quantitative easing plan.
On the technical side, the pair has broken above the 1.30 line and is based above the 200 SMA on the daily and four-hour charts. The next resistance looks to be between 1.3250 and 1.33. If the pair crosses that line, and it looks like it will, the new target will be 1.3450, where it will hit the 200 SMA on the weekly chart and the long-term trend line. The combination of these two elements will create a very strong resistance level, where the pair will either revert back to downward movement, or begin a new bullish trend that could take prices upwards of 1.41, or even 1.49.
A renewed bearish trend, which is still the more likely scenario, could trigger strong sells, which could take the pair as low as 1.20.
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