The Queen euro or the King Dollar? EUR/USD declines further

FXstreet.com (San Francisco) - oh, who would ever wanted to fight the USD? Since the May 1st high of 1.3240, the EUR/USD fell around 440 pips in just two weeks to test the 1.2800 area in the Friday's session. The pair closed the day at 1.2833, 0.36% negative on the day.

In the short term, the perspective remains negative as the FXstreet.com trend index says the EUR/USD is slightly bearish in the 1-day chart. Indicators such as MACD, CCI and Momentum are pointing to the south while the Stochastic is Bullish.

"The strong bearish momentum seen in EUR/USD this week, has put the pair under risk of massive selloff as price is approaching a key support level, the neckline of a H&S figure around 1.2750," FXstreet.com Chief Analyst Valeria Bednarik commented in a recent report. "Considering the fact that the year low is at 1.2744, and therefore stops below should be large, a break lower should be the kick start of another round of dollar demand against the Euro."

Among these lines, with the euro zone contracting for its sixth consecutive quarter and, of course, leaving the door open for another negative print in the Q2 GDP, it seems more and more plausible that those peaks in EUR/USD back in February will be remembered as the best moments of the cross in the present year.

“The continued depreciation of EUR/USD drove the DXY Index to reach an intraday high of near 84.10, almost matching the high reached in July 2012," Korber continued. "We recommend a risk-neutral short EUR basket trade for those who look to sidestep the periodic short-covering rallies in EUR/USD."

The FXstreet.com forecast poll showed a neutral bias for the EUR/USD in the week ahead as the next Friday's target is 1.2821 while the 1-month is 1.2898 and 1.867 as 3-month price.