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The euro is trading in consolidation mode against the U.S. dollar, with the pair keeping the 1.3450 level. It was a choppy Monday session, with the EUR/USD trading in a 50 pips range between 1.3420 and 1.3475. Now, the pair is closing the day at 1.3450, 0.12% below opening price action.

"Fundamental drivers continue to support U.S. equities, translating into U.S. dollar strength against major currencies," points out FXstreet.com analyst Richard Lee. Earlier in the day, the better than expected U.S. durable good orders fueled sentiment but later, the poor data out of the U.S. Pending Home Sales undermined the previous rally.

With the recent upside move, the EUR/USD has run into resistance at 1.3500. "The round figure holds some formidably, given it prevented a similar break higher back in February last year and is likely to remain steadfast in light of this new bullish wave," adds Lee, who believes that any failure to break above the barrier would purport "a decline towards initial support via the 1.3154 figure."

As for the short term, the EUR/USD will face the immediate support at 1.3425 (low January 28) followed by 1.3352 (MA10d) en route to 1.3349 (low January 25). On the flip side, a break above 1.3480 (high January 25) would open the door to 1.3487 (high 2012 February 24) en route 1.3491 (50% of 2011-12 decline).

EUR/USD Technicals Favor A Bullish Continuation

After reaching an 11-month high of 1.3478 on Friday, the EUR/USD entered a consolidation phase on Monday, and even though hourly chats show a neutral picture, longer-term indicators remain bullish. A break above the 1.3480/85 zone (January 25/2012 highs) would open the doors for a continuation toward the major 1.3500 level, while the bearish pressure could increase only below 1.3390, delaying bulls and extending the corrective/consolidative phase.

UBS has revised its 1-month target to 1.3700. "Our one-month target of 1.33 has been overshot and now we expect EUR/USD to spike as high as 1.37 over the next few weeks," states the UBS analyst team. However, the UBS team maintains its three-month target of 1.30 and longer-term year-end forecast of 1.20.

In this way, UBS joins Goldman Sachs' dramatic revision from 1.25 on its 3- and 6-months target to 1.4000 flat over the coming months.

TD Securities is bullish, too. "Overall, we remain bullish near term on EUR/USD, and the EUR crosses still look like better buys to us as well," says the TD Securities team. "That suggests to us this modest consolidation is a buying opportunity. 1.3400 should provide solid support."

Rabobank agrees on the bullish idea and after assessing the last CFTC COT report, analyst Jane Foley commented, "Net EUR longs pushed higher to stand at their strongest position since July 2011. The continued improvement in the spot market suggests the EUR has the potential to rise further this week." Regarding the greenback, Rabobank's Foley added, "Net USD longs edged a little higher but in recent weeks, positions have been consolidating at fairly low levels."

The Tuesday Ahead

Moving forward to Tuesday, the euro docket will kick in with a gauge of the German consumer confidence by the GFK Survey, followed by Import Prices, ahead of French Consumer Confidence and Spanish Retail Sales.

Across the Atlantic, the S&P/CS Home Price Index and January's U.S. Consumer Confidence are also due. Others events to pay attention in the coming days are:

- Fed Interest Rate Decision (Jan 30 19:15 GMT)
- U.S. Nonfarm Payrolls (Feb 01 13:30 GMT)
- U.S. Gross Domestic Product Annualized (Jan 30 13:30 GMT )
- German Consumer Price Index (Jan 31 13:00 GMT)

On the Fed side, and given that baseline economic fundamentals remain well-supported, "speculation is growing that Fed policymakers may hint at an early exit from recently implemented monetary stimulus as the notion of a rebound continues to surface," notes Fxstreet's Richard Lee. "And any innuendos of a retraction of stimulus would be particularly bullish for bond yields, which could translate into U.S. dollar strength in the medium term."

Source: Forex: EUR/USD Consolidates At 11-Month Highs, Technicals Point Higher