EURUSD: Faces Corrective Recovery Risks.
EURUSD: After recovering for two days in a row, EUR must now overcome the 1.2332 level, its July 19’2012 high to extend its correction. If this occurs, further strength should build up towards the 1.2407 level which also serves as its .50 Fib Ret (1.2748-1.2040 decline). We expect a combination of these levels to turn the pair back lower. However, if this fails, further corrective recovery risk could develop towards the 1.2482 level, its .618 Fib Ret. Its daily RSI has turned higher supporting this view. On the downside, the pair continues to maintain its broader medium term bias despite its present correction. This suggests that on ending its recovery, it should return below the 1.2040 level. This should target the 1.2000 level, its big psycho level. We expect EUR to face price hesitation ahead of or at this level. In such a case, it could see it back off higher but if that level is breached, the pair should weaken further towards the 1.1950 level. All in all, EUR now faces corrective recovery risks.
