TD Securities - EURUSD biased lower; we continue to expect a drop to 1.34/1.35

TD Securities - "EURUSD rebounded in the early part of the past week, much as we expected it might after the consolidation late the week before. But despite a very powerful rally Monday (outside range day), the gains did not have any staying power and the EUR traded softly over the balance of the week, falling to test the 40-day MA. The market may be able to consolidate a little longer (and gain a little more) above 1.3775 early next week but the short-term bias towards more corrective losses of the February/March rally should extend (towards the 1.3665 area (61.8% and 100-day MA). From here, we think gains through 1.3850/75 would improve the EUR’s undertone from a short-term point of view but, overall, its inability to hold gains above 1.38 for a sustained period are starting to tell.
We rather think a firm cap is forming below 1.40 now and that minor gains (1.3800/50) from here are a sell.
The March month overall has been effectively a round trip from the low 1.37s to the high 1.39s and all or most of the way back again.
It will take a big rally by the end of the month to remove that blow from the longer term chart and the weekly patterns continue to point lower. Bearish price action in the past three weeks has been confirmed by net losses in the latest week. Weekly support at 1.3700/10 is holding but we look for a test of trend channel support (rises to 1.3671 and converge with the above-noted daily supports) at least next week. We continue to look for a drop back to 1.34/1.35."

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