Euro Remains Well Bid At 1.3450

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 |  Includes: FXE, UDN, UUP
by: FXstreet

Despite the softer tone of the euro's entourage at the beginning of the week, the broader risk-on mode and the bullish trend would not be affected, as any dips in the EUR/USD look shallow and thus may represent buying opportunity for traders.

… Interesting week ahead, potential market-movers

Last week saw a further confirmation of what was insinuated at the beginning of 2013, as the price action of the cross rapidly escalated to 11-month highs, just pips away of the key resistance at 1.3500, although the impetus run out of steam later, followed by an expected correction lower in combination with some logical profit cash-up.

In addition, seems that the ECB is decoupling from the prevailing global easing trend, namely on the supposition that the euro area now has better growth prospects and more solid hopes of leaving behind its crisis sooner than estimated. The recent figures out of the 3-year LTRO's early repayment released on Friday are indicative of some sort of improved health of the banking sector and exceeded traders' expectations. This, plus better-than-expected data in Germany - recall ZEW Survey and IFO results - are bolstering the late upside in the cross, leaving the single currency posed for a re-test of 1.3480 and levels beyond 1.3500

The solidness of the recent euro upside would be put to the test these upcoming sessions, as this week's releases may leave space for surprises. Aside from Friday's U.S. NFP, Germany would face another measure of confidence via the Gfk Survey, followed by inflation, unemployment and the manufacturing PMI figures. The U.S. economy would also release its manufacturing PMI result, and Q4 GDP and inflation figures, against the backdrop of the FOMC gathering, albeit the market consensus is not expecting any major announcements.

In addition, the EUR could face extra pressure as the markets get closer to the deadlines in the U.S. fiscal front, March 1st and May 19th, where the greenback is expected to return to the headlines; and the incipient recovery in the US fundamentals - mainly via the labor market - is set as well to threaten the upside in the cross, adding bidding pressure to the USD.

When comes to the technical view, the in-house Bullish Percentage Index (BPI) is intensifying its upside into the overbought area, as 94.74% of the euro-based pairs are still on bullish mode, according to point and figure patterns.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.