By Mohammed Isah of fxtechstrategy.com
: The euro-dollar currency pair is likely to see further near-term weakness after its failure to break and hold above 1.2451, its May 28 high, sent it lower Monday and early Tuesday.
However, we expect consolidative to corrective price action toward the 1.2451 level after the pair ends its current weakness.
The next downside target is 1.2162, the pair's June 14 low, with a loss there opening the door for the pair to target 1.1875, the 2010 low.
A firm break and close below that level will have to occur to annul the euro-dollar's corrective recovery and bring further weakness toward the January 2006 low at 1.1801.
A violation of that level will set the stage for more declines toward the major support level at 1.1640 that was established in 2005.
To the upside, the euro-dollar pair must make a clean break of 1.2451, its May 28 high, in order to resume its recovery from the 1.1875 level toward its May 21 high at 1.2671. This view remains valid as long as the euro continues to trade above the 1.2000/1.1875 zone. Its daily studies, which are bullish and pointing higher, support this view.
All in all, although the euro-dollar still retains its broader bearish bias, consolidative to corrective price action is expected toward the 1.2451 level after the pair's current weakness ends.
Mohammed Isah is a technical strategist and head of research at FXTechstrategy.com, a technical-research Web site. He has been trading and analyzing the foreign exchange market for the past seven years. He formerly traded stocks before crossing over to the forex market, where he worked for FXInstructor LLC as a technical analyst and head of research before joining FXTechstrategy.com. He has written extensively on the forex market and technical analysis and his articles have been featured in The Technical Analyst Magazine, The Forex Journal Magazine, The International Business Times and FXstreet.com. At FXTechstrategy.com, he writes daily, weekly and long-term technical commentaries on currencies and commodities, which are offered to its clients. He also produces
for his subscribers. He provides full coverage of the forex market with specific focus on G10 currencies as well as the commodities markets, with focus on five key commodities.