Euro Rate Today (30/10): EUR no longer overbought; does this open the way for a challenge on 1.4?

The euro dollar exchange rate (EURUSD) is trading 0.05 pct up on last night's closing rate at 1.3754.

Meanwhile the euro pound exchange rate (EURGBP) is 0.08 pct lower at 0.8560.

(NB: The above are spot market quotes; your bank will affix a spread to the figures at their own discretion. However, an independent retail FX provider will guarantee to undercut the rates offered by your bank, thus delivering up to 5% more FX.)

The EUR/USD weakened yesterday, confirming some exhaustion in buying interest; a state of affairs that has extended into today's trading session.

"The support at 1.3742 is challenged. Another support stands at 1.3651 (21/10/2013 low). A resistance lies at 1.3832," reports Luc Luyet at MIG Bank commenting on the immediate levels to be aware of.

This pullback will certainly be seen as healthy by those bullish traders who were looking for better entry levels to join the euro rally.

Ipek Ozkardeskaya at Swissquote Research points out that the EUR/USD is no longer overbought:

"At the current levels, EURUSD has room to breathe after its massive rally since mid-October. The 14-day RSI (currently at 66%) stands below the overbought zone and the pair is back within the Bollinger bands."

Meanwhile, we hear from Sverre Holbek at Danske Bank that the peak in euro long positions (i.e the amount of people betting that the currency will arise according to the CFTC) could soon peak thus paving the way for a broader correction lower.

"For EUR/USD we still view 1.40 as a level where one should consider going against the recent move," says Holbek.

Analyst Piet Lammens at KBC Markets says he is forecasting the euro to reach 1.4 against the US dollar in coming sessions:

"From a technical point of view, the EUR/USD picture is bullish. The pair rallied
as a test of key support at 1.2745 (2013 low) early July failed.

"After a modest correction in the second half of August, the rally resumed and following the FOMC decision not to taper in mid-September, it broke above 1.3369/1.3452 resistance.

"A double bottom formation appeared on the charts. After the US fiscal deal that reopened government, but also galvanised expectations that the FOMC was side-lined for longer, EUR/USD broke above the 2013 high, touching the 62% retracement at 1.3833. The pair is in overbought conditions, which may result in some correction, but as long as the pair stays above 1.3369/1.3452, the picture remains bullish with next key resistances at 1.40 (psycho/ line in sand ECB?) and 1.4248 (26 Oct 2011 high)."

So while the euro remains the currency market outperformer at present we are now certainly seeing the groundworks being laid for a broader correction lower.