The bloc currency has been suddenly awakened from its congestive pattern around key resistance at 1.3300, spiking to 1.3350 after a sudden bout of risk appetite, posting two-day highs and approaching to Tuesday's tops in the vicinity of 1.3390.
… Rumors leading the way
In the absence of significant eurozone data or events, politics has stepped up to write headlines. After all, that's what politicians are for, to talk, right? Within in a passive and ranging context, any comment would always have an exaggerated echo from the FX markets.
Recall when Eurogroup's J.C.Juncker stressed a couple of days ago that the euro exchange rate was "dangerously high," his comments dragged EUR/USD down to the proximities of 1.3260 until yesterday's insight from the ECB's E. Nowotny, that the shared currency would not be a major concern at the moment, caused a sharp shift in sentiment and spot back higher. This morning saw the turn of the German Vice Chancellor P. Roesler, saying that Germany will not tolerate a weak euro. Conclusion? The euro jumped more than 50 pips in a matter of minutes, hitting 1.3350 and beyond.
There are seemingly to be only rosy skies in the euro area since Draghi has changed to an optimistic view in the last ECB gathering. Nothing else seems to matter, proved by the last poor data out of Germany's GDP during last year, or even when the first economy lowered its 2013 GDP forecast to a meager expansion of 0.4%. Fundamentals are now out of the game, as the risk appetite seems to be king.
Technically speaking, Karen Jones, analyst at Commerzbank, argues, "EUR/USD continues to ease back from the 1.3400 resistance - this is viewed as a small retracement ahead of any further gains. The recent 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."