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After recording its fifth positive day in row, the EUR/USD has advanced to test the $1.3100 level for first time since March 15th. Currently the pair is trading in consolidation mode around the $1.3085 but it remains slightly bullish according to our trend index.

With the pair at the boundaries of the $1.310, TD Securities' analysts Shaun Osborne and Greg Moore stated in a recent report that despite that Rabobank is "still more neutral on the EUR," the bank becomes "better buyers in the upper $1.30 area, and even more so above $1.3150."

"The EUR continued to be better bid, as it has been since Draghi's comments at the ECB meeting last Thursday," points Osborne and Moore. "That contributes to the more constructive picture of EUR/USD, but the mid $1.30 area seems to be a bit of a sticking point." As for technical indicators, the MACD, CCI and Momentum indicators are pointing bullish while the Stochastic is bearish in the 1-hour chart.

On Monday, Sebastien Galy, Senior FX Strategist at Societe Generale states that the euro may be replacing the JPY as a funding currency and it could be creating a short covering that boosts EUR. Today, the opinion is shared by Emmanuel Ng of OCBC Bank, who notes that in the near term, market talk of diversionary investment flows out of Japan may benefit the EUR for as long as system tail risks remain under wraps.

The day ahead:

Wednesday's docket will kick in with the Chinese Trade Balance figures ahead of French, Spanish and Italian industrial production. Across the pond, the U.S. Monthly Budget Statement and the FOMC minutes will be in the center of attention.

  • FOMC Minutes

  • Monthly Budget Statement

Source: EUR/USD Knocks The $1.3100 Door Again; The EUR Rises On JPY Sell Off