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The 1.2500 holds a EUR/USD ready to advance; watch for USDX weekly close below 87.60

FXStreet (San Francisco) - The EUR/USD rose 90 pips from 1.2440 to break above the 1.2500 area and to trade at highs since November 11 at 1.2530 during the American morning; however, the pair found selling interest at this level that sent it back to test the 1.2500. This level contained the decline and now the cross looks ready to set new highs.

The reason? A set of weak economic data released on Wednesday plus the poor consumer confidence reported on Tuesday has suggested the market about the state of the American mood before the holiday season. At the same time, the dollar index is falling for third day after peaking at 88.43 on Monday and is now testing the 20-day MA level around 87.60.

It is the first time the USDX is testing its 20-day MA level in November. That means the weekly close above or below this key level will be important in the short term in USD. If the dollar closes below the 87.60, it will have freeway to test the 50-day MA of 86.30, a level that has not been touched since July.

In terms of the Euro to dollar foreign exchange, a cheaper USD with a bearish signal in the short term will likely send the pair to probably test its 50-day MA at 1.2650 and then the 1.2700 area negotiated in October.

EUR/USD sentiment

Currently, EUR/USD is trading at 1.2509, up 0.26% on the day, having posted a daily high at 1.2532 and low at 1.2444. The hourly FXStreet OB/OS Index is showing neutral conditions, alongside the FXStreet Trend Index which is slightly bullish.

As for the short term, if the pair consolidates gains above 1.2500, it will retest the 1.2530 level before attempting to go above 1.2560 and 1.2600. To the downside, supports are at the mentioned 1.2500, 1.2470 and 1.2440.

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