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Another weekend has passed. And another relevant event, this time the Annual Conference of the IMF in Tokyo, has gone, leaving the financial community with that well-known feeling of emptiness at least until the end of this week, where another EU Summit will kick in.

Curiously, Spain was not in the headlines in the last couple of days. Moreover, Spanish Economy Minister, Luis De Guindos, has made it clear when commented that the country would be able to finance itself throughout the rest of the year, implying that a call for financial aid is not in the short-term horizon anymore. Euro bulls would thus see their hopes running out of steam, as the ECB's OMT programme can't be activated without a bailout.

On top of that, and pouring cold water over investors' hopes, President M.Draghi has ruled out any activation of the supervisory role of the ECB before 2014

… Is EUR/USD at 1.3000 cheap?

So, against a backdrop of another potential fiasco in the next EU Summit - it is not pessimism if one checks the meeting's results over the last year - plus the inability of the ECB and the EU sovereigns to show a higher grade of commitment in tackling the crisis, the EUR will surely face a choppy week, mostly hinging on data releases and results. Of course, investors should not discard news from the Spanish and Greek front, however they both seem contained, at least prima facie.

In the opinion of Karen Jones, expert at Commerzbank, the bounce of 1.2825 "has managed to neutralize the technical indicators, but the market remains sidelined. We continue to suspect that the market will struggle to regain 1.3072. However, while underpinned by the 1.2788 3-month uptrend, further upside probes remain plausible." In the opposite direction, the analyst adds that a breach of 1.2788 would increase the selling pressure towards 1.2605 en route to 1.2472.

Geoffrey Yu, researcher at UBS, argues that the Swiss bank maintains its bullish perspective on EUR/USD, suggesting that "A break above 1.2992 would trigger scope for more upside opening the doors to 1.3072 and then 1.3172. Support lies at 1.2802." Following this idea, currency strategist Jane Foley at Rabobank, says that sudden bouts of risk aversion would benefit the greenback although they would be short lived, pointing to pullbacks towards the 1.2600 region in the very near term, while 1.3500 arises in a 12-month view.

… Interesting docket on Tuesday

Starting early with the RBA minutes from the last meeting, where the central bank has cut 25 bps the overnight rate, the European session will see the Italian trade balance figures preceding a key 12m and 18m auction of Letras in the Spanish debt markets. EMU CPI and trade balance figures will precede the relevant German ZEW Survey series.

Source: Euro In Quicksands?