Euro momentum favours additional upside

The bullish momentum in EUR/USD is still favouring additional euro gains.

Resistance may come in at the 1.3630 level, which is the 50% retracement from the May 2011 highs to the July 2012 lows, and may provide an initial target. A move through this metric puts the 1.40 level in sight. The 1.36/1.3620 level has been providing some support over the past few days, with the 1.3480 point acting as the key support to any downside for the pair.

Fundamentally, any action from the European Central Bank in respect of an interest rate cut seems to be on the back burner for now. German CPI came in as expected, showing a 0.2% increase on the month and a 1.6% increase year-on-year.

The budget deficit in the US is due out at 7pm (London time). It narrowed more than expected in November, coming in at $91.6bn, helped along by stronger jobs numbers.

Spot FX EUR/USD chart

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