Forex Flash: What to expect from EUR/USD? – Danske Bank, Westpac and Commerzbank

FXstreet.com (Barcelona) - Against the backdrop of the recent Greek deal, the single currency has fallen off the cliff this morning, dipping as low as the boundaries of 1.2940 after hitting 1.3010 overnight.

According to Chief Analyst A.L.Rasmussen at Danske Bank, "An important tail-risk has been removed from the euro with the Greek deal reached overnight. Hence, this speaks in favour of further upside for EURUSD, EURGBP and EURJPY. Note that the US Congress is back and the fiscal cliff might return to the limelight but overall it should be another positive day for the euro".

"While the Eurogroup has set 13 Dec for formal approval of the disbursement& for markets the deal should put Greece largely on the backburner for a couple of months before it starts missing its fiscal targets again. While a positive for the euro near term, we doubt further EURUSD short-covering will produce sustained trade beyond 1.3050/1.3100", concludes Sean Callow, Strategist at the Australian bank Westpac.

Karen Jones, expert at Commerzbank, assesses "EURUSD spent most of last week working higher and yesterday charted an inside day. The market has continued to climb during Asia and the correction looks set to extend to 1.3037, the 78.6% retracement. Ideally we would expect this together with 1.3075 (downtrend 2011-2012) to cap the advance." The analyst adds that a breach of the near term support at 1.2918 would now be necessary to offset upside pressure, targeting then the key 200-day moving average at 1.2800