Forex Flash: EUR/USD bolstered by support at 1.3040 – RBS

The head and shoulders pattern as indicated adjacent finally reached its downside target and the market found support at 1.3040 which was the low on the 9th and 10th of January. Recall that it was this level from which the market rallied aggressively up to the annual highs at 1.3709 initially. According to Technical Strategist William Moore at RBS, “The basing of the market at 1.3040 leads us to think that we’ll see the market drift up to 1.3198 possibly even to 1.3269 before we meet any meaningful resistance again.” In the short-term however, risk surrounding Italy has to weigh on the pair in conjunction with the fundamentals.