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Euro challenges top of the range

FXstreet.com (Córdoba) - After the strong slump suffered in the wake of the ECB rate cut, the euro managed to recover ground against the dollar, underpinned by better-than-expected German data published this week.

Market had started to worry about the state of eurozone core countries after a sting of weak economic indicators, so stronger-than-expected German industrial orders and output data trims expectations the European Central Bank will cut again.

In TD Securities team's view, EUR focus remains on the evolving ECB message, "which as we heard last week remains open to another rate cut", they say. "They have not signaled any balance sheet expanding programs, however, which overall could leave the EUR well supported".

From a technical perspective however, EUR/USD shows a positive tone in the short term, having reached a 1-week peak of 1.3194 and price challenging 1.3200, but the neutral tone persists in bigger time frames as it remains well within the established range that has held since early April.

Against this backdrop, EUR/USD needs at least a clear break above the 1.3230/40 area (50% retracement of 1.3710/1.2750 and top of the mentioned range) to improve the longer-term picture, with 1.3300 coming into view.

On the other hand, loss of 1.3030 could threaten the positive bias and pave the way for a retest of the 1.2970/50 zone.

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