The single currency has found extra support for its march north from the last Chinese manufacturing HSBC PMI print during November, extending last week's rally and now navigating into higher (and more dangerous?) waters above the psychological 1.30 figure. The risk-on contagion has rapidly affected markets around the globe, intensifying the outflows from the safe havens whilst at the same time prompting upside sustainability.
… What can go wrong?
Even Spain has printed a better-than-expected manufacturing PMI today, along with Germany, France and the euro-composite, allaying specters of bearishness that were orbiting around EUR/USD. Headlines in Spain have completely changed the tenor as of late, concentrating now in the downtrend out of its borrowing costs, and relegating the rescue package talks to mere memories. Greece continues to dominate the scenario, however the intensity of the news coming from the Hellenic Republic are far from market-movers. A new EcoFin meeting today would deal again with the technicalities surrounding the last agreement, within the context of the buy-back programme.
All in all, the week seems pretty rosy ahead for euro bulls. Even the next ECB monetary policy meeting due on Thursday would be 'almost' a non-event, as evidenced by the late radio silence from the bank commanded by Mario Draghi and the lack of effervescence of recent comments. It feels like and obligation to say that market participants would be paying close attention to the press conference by President Draghi.
It's an open secret that strong resistance awaits traders above 1.3050/1.3100 and that the euro would need really solid data/results/events to not only leave those levels behind but also to change the prospect of a tepid fourth quarter for the bloc economy.
Karen Jones, expert at Commerzbank, argues "EUR/USD has seen a strong rally overnight and has left a time zone gap back to 1.3000. This is likely to be filled ahead of any further upside attempts. The market tried resistance above 1.30 3 times over the past week. It has not sustained a break and we remain wary of failure here. The market continues to face dense resistance directly overhead in the 1.3052-1.3180 band".
The general euro strength has echoed in the in-house Bullish Percentage Index (BPI), which continues to operate in the overbought territory, showing at the moment that 84.21% of euro-based pairs are on bullish mode, according to point and figure patterns.
… Light docket on Tuesday
There is nothing in tomorrow's docket that can menace the actual upside in the cross, although some logical profit taking should not be ruled out. November jobless change in Spain and the EMU Producer Price index will only be released. Of note, however, are both RBA and BoC interest rate decisions.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.