Forex: EUR/USD, 1.3250 or 1.35 firm candidates on next move

In the wake of the Chinese new year of the snake, and with a dark moon week developing, often said to be linked to less energy for things, the FX market and the EUR/USD in particular are struggling to get out of second gear, with low levels of vitality in the price activity, and price action showing choppier and stranger moves all around.

Away from any astrological signs, it is clear that the pair has lost part of its January allure, as price continues to struggle and actually treating the 20-day EMA as dynamic resistance around the 1.34 round number now. The main driver of a mildly variant 1.3425-1.3353 exchange rate on Monday was caused by European officials headlines referring to the 'hot topic' of Euro value.

As Kathy Lien, co-founder at BKAM, notes: "The French said they will call for a coordinated approach to stabilize exchange rates, the Italians said the distortion in the rate is a concern, Luxembourg isn't worried and more importantly, the Germans do not believe that the euro is extremely overvalued and even warned that a policy of targeting a lower euro would drive higher inflation, said Weidmann, the head of the Bundesbank, also a member of the ECB and we believe that Draghi takes his views seriously."

From a short term perspective in the EUR /USD, "technical readings lack upside momentum", says Valeria Bednarik, chief analyst at FXstreet.com. In the 4 hours chart, her studies fail to offer more clarity, saying "the upside remains unclear, with price now in need to advance and settle above the 1.3440 area to be able to erase the intraday bearish tone."

Another take on the EUR/USD was shared by Fan Yang, independent currency analyst at FXstreet.com, noting that recent price activity forebodes the onset of a range between 1.3430 and 1.3350 to start the week, adding that "a break above is not indicative of a bullish continuation until at least a push above 1.35." On the downside, he sees falling channel in the 4 hour chart, which should contain prices in case of further falls from the consolidation range.

A financial institution that remains positive in the current EUR/USD structure is JPMorgan, although Niall O'Connor, FX strategist at the U.S.-based bank, also points that the formation still inherit an undeniable reversal risk.

"The various wave counts in EUR/USD are also reflecting this mixed picture which remains mildly bullish though as long as key-support at 1.3310/1.3257 (int. 38.2 %/last low) is defended" Niall notes.