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EUR/USD continues to respect a very clear range-trading pattern which has been familiar for both buyers and sellers since being established more than a month ago. In Asia, the pair traded in a heavy tone toward the 1.29 handle as senior eurozone sources told Reuters the Spain's bailout will most likely come in November. In theory, and so far in practice, traders seem to agree. This is disappointing news as delays on the Spain aid is killing trader's patience.

As Ivan Delgado, Head of Asian Editor at FXstreet.com, notes:

I think market psyche was playing around the assumption of a bailout application sometime in mid-October, so info about postponing it a bit further down the road, if true, doesn't help the euro bid tone. However, this alone is no reason to see the pair trading beyond its 1.3050/80 - 1.2825 range, as 1.28 bids, if achieved, are reportedly very strong. From Spain's viewpoint, it is almost a guarantee that the government looks to get the October 21 regional elections in Galicia behind before any bailout.

However, Spanish newspaper El Pais reported this Sunday that the real reason for the delay are that

the Spanish government wants guarantees that if it goes ahead with the request, the ECB will intervene in the secondary debt market to ensure that the risk premium on Spanish debt goes down to around 200 bp and stays there.

According to the Spanish paper,

this is the condition that Spain is setting before it officially requests the loan, government sources say, denying rumors that the real reason for the delay are regional elections.

In the Greek drama, there has been some signs that the European Union may find an alternative way to kick the can down the road and provide Greece with more debt concession as off-track delays in programs and the depression makes it hard to return monetary commitments to creditors. Some of the loudest talk so far is looking at voluntary Greek debt buy-backs using ESM money, although other options like ECB cutting yields on its Greek bond holdings are not being ruled out either. Merkel said recently Greece should be given another chance, obviously looking out for the interests of private German banks.

Giving his weekly preview, FXWW Founder Sean Lee, notes:

Speculative EUR shorts increased by around 40% in the week to October 9th yet this had no major impact on the level of the EUR. Big reserve and asset managers have been playing the range as well, adding plenty of liquidity near the top and bottom. Asian central banks were noted buyers on Friday near 1.2920 and U.S. corporates were noted sellers at 1.2980.

According to Sean, market sentiment remains very bearish towards the EUR but "if the range-trading mode continues, the odds increase that a bullish break eventuates on the back of short-covering" he said.

Valeria Bednarik, Chief Analyst at FXstreet.com, stresses that this past Friday high at 1.2990 remains a strong static resistance level. Meanwhile, Fan Yang, Technical Expert at FXTimes, points that a break above 1.30 "opens up some bullish intent", but reminds traders that the nature of the action will still be intra-day noise and "swings will not be clear until a break either above 1.3170, or below the rising trendline and below 1.28" he adds. Meanwhile, NAB Analysts are seeking new range highs and lows.

On the data front, the European calendar is vacant and traders should wait until the U.S. retail sales and the Empire Fed survey for the first risk events in EUR/USD.

Source: EUR/USD: New Week, Same Range