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EUR/USD has completed a small “head & shoulders” top to add weight to the Credit Suisse analyst team view for a deeper corrective setback to the December low, 38.2% retracement of the November/January rally and 55-day average, currently at 1.2065/45.

See – EUR/USD: Close below 1.2100 or above 1.2220 to clarify the next leg direction – OCBC

Key quotes

“EUR/USD has seen a break of key near-term price support at 1.2132/22 and although this hasn’t been sustained thus far, with the ‘measured objective’ from its top at 1.2355 achieved and with the USD itself holding major support as expected our bias remains for this to be confirmed. This should then clear the way for further corrective weakness for a deeper setback to 1.2065/59 initially – the December low and 38.2% retracement of the November/January rally. With the 55-day average not far below at 1.2043, we would look for an attempt to find a floor here.” 

“Resistance remains at 1.2180 initially, then 1.2208. Above 1.2231 though remains needed to ease the immediate downside bias for a move back to 1.2285, but with a break above here needed to clear the way for a retest of 1.2345/55.”