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Euro gains traction and breaks out of its range

FXstreet.com (Córdoba) - Even though the dollar attempted to recover ground during the European session, gains were short-lived as the greenback took a hit following a disappointing string of US data.

Weak GDP and jobless claims figures did nothing but undermine expectations that the Fed could begin to taper its program of buying Treasuries and mortgage-backed securities within the next few policy meetings.

Against this backdrop, and also supported by positive eurozone data, the euro managed to break its 2-week range to the upside, and rallied toward the 1.3060 area where it printed its highest since early May. Better-than-expected housing data did little for the dollar, but helped to support stocks in Wall Street.

Technically speaking, EUR/USD holds a short-term positive bias, although with indicators reaching overbought levels, the pair may see some consolidation ahead of another leg higher. Longer-term picture is not that bullish, and the euro may need to regain the 1.3120 zone (where the 100-day SMA and the 38.2% retracement of the 1.3710/1.2750 drop converge) to confirm an upward continuation with the 1.3230/40 zone as next target (50% Fibo level/May 1 high).

On the other hand, loss of the 1.2880 support could see EUR/USD falling towards the 1.2835 region en-route toward 1.2750 (2013 low).

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