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EUR/USD: sell on rallies

On Tuesday EUR/USD extends the rebound after having dipped to $1.3050 on Monday. Euro recovered to the levels above $1.3100, closing the Monday’s bearish gap, but was capped at $1.3150 (23.6% Fibonacci retracement from the June 19-24 decline).

Our general view on the pair remains bearish with the medium-term target at $1.2850. Bullish correction would extend in case of a break above $1.3150, but the upside seems to be capped by the $1.3180/3200 (38.2% Fibo from the May-June rally, 38.2% Fibo from the June 19-24 decline) or $1.3220/45 (50% Fibo from the May-June rally) resistance areas. Only a break above $1.3250 would mean that the June decline has come to an end.

In this view, we are going to sell euro on rallies. Note that for now the pair remains supported by the $1.3080/65 area (100-, 50- and 200 day SMAs). Decline below would open the way to $1.3000, but this psychological support could temporarily contain weakness.

Chart. H4 EUR/USD

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