Forex Flash: EUR/USD may be forming base – TD Securities

FXstreet.com (Barcelona) - Not much has been said today about the Cyprus bailout but Eurozone PMI did the job of sending the EUR/USD lower: “The EUR was initially pressured by PMIs that showed a little more erosion at the core of the region. It’s notable however, that we haven’t seen new cycle lows and that the EUR’s recovered al-most all its earlier loses already, despite the very soft numbers —including a dip below the 50 threshold in German figures”, wrote analysts Shaun Osborne and Greg Moore, suggesting that also Cyprus uncertainties weren’t able to push the EUR below significant support, which may suggest that a lot of bad news is al-ready priced in. “From a broad perspective, that is a sign that we could be seeing a base forming here, as long as the Cyprus or Italian situations don’t unravel. With those key event risks still lingering though, it may be little too soon to get bullish”, they added, pointing to the 200-day moving average as key support. If broken, it should open up another leg toward the mid-upper 1.26 area.

“For the day ahead, we also still have quite a bit of headline risk in Europe, with still no solution on Cyprus’ ‘plan B’ for its contribution to the bailout, and Italian politicians still trying to negotiate a coalition govern-ment”, they continued, adding that reports that another proposal will be presented to parliament today (re: Russian deal), while the ECB Emergency Liquidity Assistance now has a cutoff date of Monday, March 25th.