EURUSD: While EUR remains below the 1.2442 level, risk of a return to the 1.2239 level cannot be ruled out. A clearance of here will set the stage for a move lower towards the 1.2132/17 levels. Further down, support stands at the 1.2040 level where a breach will pave the way for more declines towards the 1.2000 level, its big psycho level. We expect EUR to face price hesitation ahead of or at this level. This could see it back off higher but if that level is breached, the pair should weaken further towards the 1.1950 level. The alternative scenario will be for the pair to return above the 1.2442 level. This will trigger its corrective recovery towards the 1.2482 level, its .618 Fib Ret and then the 1.2500 level. All in all, EUR continues to maintain its broader medium term downside risks though facing recovery threats.
