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The EUR/USD approaches the London session established on a 1.3260-1.3400 consolidation box. There's talk over a possible double top being challenged by other segments of the market, looking at the current price pattern developing as a mere pause before the next push through 1.34.

Recent key drivers on the euro have been verbal interventions, with the post ECB-inspired rally on January 10 stalled by Eurogroup President Juncker's comments that the euro levels were probably too high. However, ECB member Ewald Nowotny and Germany's economy minister affirmed that the currency is not overvalued soon after, helping to normalize the neutral tone.

The primary conductor of euro prices this Monday will be the EU finance ministers meeting and the headlines that this gathering may produce, with a number of European officials speaking afterwards.

According to Kathy Lien, co-founder at Bkassetmanagement:

If there are additional concerns about the level of the euro, the consolidation could turn into a near-term top for the currency. However, the comments that really matter are the ones from the ECB and more specifically central bank President Mario Draghi.

With inflationary pressures limited, Kathy believes that "their uncle point for the EUR/USD is closer to 1.38-1.40 than 1.34".

Technically, the broader picture remains EUR bullish on the daily chart, says Shaun Osborne, Chief FX Strategist at TD Securities, following the limited selling off 1.34 last Friday. According to Shaun, price action "looks more like a consolidation ahead of another push higher at this stage."

As things stand, he adds:

The EUR's outlook remains constructive from a technical point of view, we think. Above 1.34 should help propel spot higher (1.36/1.38). The market made a marginal new high this week and remains well above key weekly supports. Price patterns, trend momentum, the position of the medium/long-term moving averages all still point higher for the EUR. Weekly support is 1.2989, major weekly support is 1.2800/25. Key resistance is a very reachable 1.3637.

Meanwhile, Marc Chandler, Global Head of Currency Strategy at BBH, is not as optimistic on the euro, noting that technical factors favor a dollar bounce scenario this week, with the euro looking vulnerable on two grounds, Chandler says.

Mr. Chandler notes:

First, there is bearish divergence in the daily (14-bar) relative strength index. This means that the indicator did not confirm the strength of the price action. Second, the dominant short-term chart pattern is a potential double top, with the failure to move above the $1.34 area in the second half of the week. The neckline of the double top comes in near $1.3255. A convincing break is needed to confirm the pattern and project around to around $1.31.

Source: EUR/USD, Top At 1.34 Or Possible Break-Up?