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EUR/USD: short-term rebound expected

On Tuesday EUR/USD extends gains, recovering to $1.2890. Yesterday the pair bounced from the supportive $1.2800 mark (three-month lows) and formed a strong bullish candle.

The medium term market still remains bearish, but we concede a few days of bullish correction. Resistance is seen at $1.2900, $1.2920, $1.2950 and $1.3000. The latter level is expected to hold the upside. Support lies at $1.2800, $1.2750 and $1.2650.

JP Morgan: EUR/USD looks vulnerable to further downside, with only one good support zone at $1.2790/45 (weekly neckline/2013 low).

Westpac: Eurogroup calmed the markets over Greece, so the $1.2750 support should hold in the near term. We still recommend selling rallies to $1.2950/1.3000 on the week with scope for $1.2600 later in July. A break below this support will open the way for a decline to $1.2455/35.

Chart. Daily EUR/USD

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