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The euro continues its march north, seemingly unabated since the onset of this week and amidst the recent move by Moody's. The subsequent confirmation of Spain's rating at Baa3, albeit with a negative outlook, has done nothing but catapult the cross even higher. In light of recent developments, the 1.3100 mark is now a definitive reality, an almost unthinkable feat as recently as the end of September, when the EUR/USD was threatening to breach the key support at 1.2800

… Spain, or the toro in the room

So, let's make a point: Spain is, at the moment, the unique catalyst of the price action of the single currency, seconded by Greece - a time bomb, as defined by many analysts. Then why would investors unwind euro longs when the long-waited Spanish bailout and the ECB are just around the corner? Recall that to activate the ECB's OMT programme (Outright Monetary Transactions), the conditio sine qua non is a bailout call by Spain.

It appears that only if the government of President Mariano Rajoy renounces to any financial aid from its peers - a scenario not even considered so far - the cross would automatically lose its main excuse to be this high, and then, all of a sudden, the bitter reality would be knocking on the euro's door once more.

… EUR does not suffer from vertigo

The EU Summit is starting tomorrow, and just a small percentage of market participants actually believe that it will be a success in light of the last meetings' results. In the opinion of Senior Analyst at Danske Bank, Sverre Holbek, the cross is experiencing some kind of support ahead of the euro gathering, commenting "we will not be surprised if Spain does not ask for help this week in connection with the EU summit, and we see a good chance that the market could become disappointed by the end of this week. Hence, the EUR/USD probability space for the rest of this week is in our view skewed to the downside." Richard Lee, independent analyst at Fxstreet.com, argues that now that 1.3000 has been breached, the cross would now target September highs above 1.3170, ahead of another key hurdle at 1.3200

… Euro docket empty on Thursday

Chinese GDP will hit the wires early morning, most surely determining the risk pace for the rest of the session. Prior surveys expect the economic activity of China to grow a hair lower at 7.4% YoY in the third quarter. Retail Sales in the U.K. are next, preceding a 10-yr Obligaciones auction in the Spanish debt market. Across the pond, U.S. weekly report on the labor market and the Philadelphia Fed manufacturing index are also due.

Source: Euro Gallantry Could Be Ephemeral