After the break to a new 4 month low and a break of support at 1.2805, EUR/USD extends its falls and is already challenging the next support line, which is only minor.
The pair is pressured by the uncertainty in Cyprus, as well as a few other negative headlines and after breaking lower, the move accelerated.
Minor support appears at 1.2750, where the pair found support back in early September. More support is found at 1.27 and 1.2660.
Another important line of interest is 1.2624, which is a double bottom on the weekly chart, as Dan Blystone from FXExaminer explained to me.
Update: US pending home sales dropped by 0.4%, within expectations. It doesn’t change the general pressure on EUR/USD due to the Cypriot crisis.
Banks in Cyprus are set to open tomorrow, but the size of the haircut is still unknown. Also the details of the capital controls are unknown, especially how long they will be kept.
In addition to Cyprus, the Italian deficit forecast was lifted to 1.8%. Italian retail sales dropped by 0.5% and a rumor about a credit rating downgrade for the euro-zone’s third largest economy is doing the rounds.
These rumors should be taken with a big grain of salt. And when credit rating agencies refuses to comment, it is just a standard procedure, not a hint about anything.
For more on the euro, see the EURUSD forecast.
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