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For a second day in a row, encouraging German data gave support to the common currency, helping EUR advance across the board. But with not much follow through over the American afternoon, it is more and more clear that investors enthusiasm is waning as the days go by. Overall, the neutral stance persists, particularly in the EUR/USD, as UBS strategists Gareth Berry and Geoffrey Yu noticed in their early report:

In particular, the EUR/USD maintains a neutral outlook - initial support is at $1.3033, a break below this would expose $1.2995 and then $1.2936. Resistance is at $1.3159 ahead of $1.3243.

Early news that the ECB was discussing asset-backed securities buying gave the pair a lift up to $1.3194, as the Central Bank continues working on giving the economy a boost. However and as usual for the EU, the idea won't become a fact in the short term, triggering some profit taking in the pair that trades back around $1.3140/50 ahead of the Asian opening.

Ahead of the Asian opening, and on a short-term perspective, Valeria Bednarik, FXstreet.com chief analyst says:

the hourly chart shows indicators easing from overbought readings, although well above their midlines, while 20 SMA heads higher below current price. In the 4 hours chart technical readings had entered positive territory, yet the risk reward ratio of buying at current levels seems not really good: selling interest is aligned in between $1.3190/$1.3225 and unless a clear break above this last, there's no room for bullish strength.

As for the longer term perspective, the pair has been trading in between Fibonacci levels: measuring the latest daily fall, from $1.3710 (February high), to $1.2744, (April low), $1.2970 comes as the 38.2% retracement, while $1.3225 is the 50% retracement of the same rally. The pair has been trading in between and unable to break either extreme on a daily basis, since April 4th.

Regardless of the technical or even the fundamental outlook, there's nowhere to go with EUR/USD at the time being and unless a big trigger wakes it up, and pushes it outside mentioned extremes; playing the extremes will remain the name of the game.

Source: Forex: EUR/USD, Nowhere To Go