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Euro extends its consolidation further

FXstreet.com (Barcelona) - The shared currency remains parked around the mid 1.3000s on Tuesday, clearly searching for a stronger catalyst to break the late dullness. Not even today’s miserable results from the German ZEW Survey seem to be sufficient to ignite the continuation of the broader bearish trend in EUR/USD, interrupted at the beginning of April. On the contrary, buying interest is still alive and finds pullbacks very well contained around the 1.30 figure.

… It’s all about risk appetite

There seem to be no headlines or docket with enough ability to break the present congestion either way, thus leaving the trade to the mercy of the risk trends, hammered yesterday after weak Chinese GDP data. The pronounced sell-off in commodities and risk-associated currencies on Monday has proved to be temporary so far, as markets are currently recovering from the blow.

In the meantime, traders keep looking east after the BoJ sparked an exodus from the yen in search of higher profits overseas, supporting the euro among other assets, despite the worrisome fundamental background that prevails in the euro area.

All is quiet on the Cyprus front, or for that matter Italy, which faces a key week in order to find the successor of President G.Napolitano – the first step towards some sort of government.

On the technical realm, the region of 1.3115/20 (38.2% Fibonacci retracement of the February-April slide) would be the initial hurdle. Further bullish impulse would target 1.3138/40, where converge the weekly highs and the 55-day moving average, en route to 1.3150 (100-day moving average) and then 1.3231 (50% Fib. retracement).
On the downside, the first relevant support sits at the psychological mark at 1.3000 ahead of the key 200-day moving average at 1.2900/10.

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