This text is from blog famous currency strategist Joel Kruger .
CUTTING IT CLOSE – The month of December is finally here and I must admit, while I am pleased with the upward progress in markets like USD/JPY and EUR/AUD over the past several weeks, I would have liked to have seen the Euro trading closer to its yearly low against the US Dollar. Instead, EUR/USD has recently traded back above 1.3000, with the major pair seemingly content on remaining locked in a drawn out consolidation below 1.3200. It seems as though a combination of improving data out of China and speculation that the Fed will look to get even more aggressive with its QE program, have been the driving forces behind this latest bout of US Dollar weakness.
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CHARTS DON’T LIE – Nevertheless, the medium-term technical outlook remains intact, and while the Euro holds below 1.3200, the risks still favor an eventual Euro bearish resumption back towards 1.2000 over the coming weeks. The key focus for me this week will be on the 1.2880 level which represents the previous weekly low. A break and close back under 1.2880 will help to reaffirm the bearish outlook and open the door for acceleration towards more significant support at 1.2660 further down. It is also worth noting that EUR/USD has deviated above all meaningful moving averages, and will likely revert back to its mean, which would suggest a near-term topside reversal. We have yet to put in a daily close above 1.3000 despite the break back above the figure, and another daily close below will also be a very welcome development on Monday.