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A mercurial euro set sails to 1.3100

FXstreet.com (Barcelona) - Curious path this one the single currency has been transiting for the last couple of sessions, dipping to yearly lows in the vicinity of 1.2910/15 just to test weekly highs around 1.3070 hours later. So, what happened? Nothing literally in the space data, as the euro docket lacked the ability to trigger any significant movement in the present week. Furthermore, the feeling of a shift in sentiment remained hovering over investors, mainly one that positively correlated US improvement with risk appetite, as confirmed by the recent all-time highs in both the Dow and the S&P.

… A change in the broader trend?

However, it would be premature to tell that this last price action represents in fact a change in the wider frame, which remains bearish so far. Still there is a long way up to change the current stance in the euro, and of course it must be accompanied by a parallel improvement in the economic fundamentals and a more solid and foreseeable political scenario, in Italy for starters.

The US recovery has now become a double-edged sword for euro bulls, as it points both towards a better risk appetite mood and the likeliness of the Fed anticipating its exit from the ongoing QE programme, the latter which is supportive of the greenback.

When comes to technicals, the EUR/USD is trading closer to the resistance at the down-trend line set from February highs, currently around 1.3085/90 and reinforced by the 38.2% Fibonacci retracement from the summer 2012 - February 2013 upside.
Further upside should find the next barrier at 1.3134 (March 8th high), followed by 1.3191 (100-day moving average) and then the 55-day moving average at 1.3284
The daily RSI still navigates below the 50% threshold, claiming that more time is needed to confirm any upside.

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