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Forex pairs in this Article » EUR/USD
FXstreet.com (Barcelona) - The shared currency has posted multi-month highs above the 1.34 figure at the beginning of the trading week, as the momentum in the post-ECB rally appears to not yet be fully exhausted - RSI in the daily charts showing levels just shy of 70

& Risk appetite only matters

The risk appetite had only posted a knee-jerk reaction before the opening bell in London, correcting lower to the mid 1.3300s looking receptive to a move above 1.3380 so long as it holds 1.3350
What is really curious is the context in which this late and steep upside in EURUSD has actually developed. The market is being dominated by soft euro zone data both as a whole and its members. Recall December manufacturing/services PMI readings, industrial and manufacturing production figures, previous months' retail sales, for example?.

However, and against this backdrop, the last words of President M.Draghi pointed towards better prospects in the bloc for the current year. Unless the central bank uses different data or results from sources unknown for the rest of the FX community, it seems surprising - to say the least - to see where this last bout of hope came from, but it possesses an overwhelming force of 'brain-washing' investors' real judgement.

In addition, markets are again led by decreasing yields of benchmark bonds in the Italian and Spanish debt markets; the rest of data, indicators and results can stay the same or get worse& it will not matter.

After the recent upside, the technical expert Karen Jones at Commerzbank suggests, "The break through the 1.33085 high suggests unfinished business on the topside. It has introduced scope for a rally towards tough long-term resistance at 1.3485/1.3560& We look for this to hold the topside and provoke failure". The analyst also points out that as long as the market trades above 1.3250/00 it will be supported. In case it breaches those levels it will trigger a potential upside to 1.3047 en route to the area around 1.3000

Today's speech by Chief B.Bernanke would be a two-edged sword as it has the potential to add some selling pressure to the euro via strengthening the greenback, or it can otherwise add more fuel to the rally, targeting the 1.3480 en route to 1.3550
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