FXstreet.com (Barcelona) - The euro is extending the upside sparked on Friday after bottoming in the boundaries of 1.2690. Improved risk appetite has pushed the cross as high as 1.2787 on Monday, extending the overnight momentum after promising ‘fiscal cliff’ talks between President B.Obama and the Congressional leaders last Friday.

Flemming Nielsen, Senior Analyst at Danske bank, comments “we still see the underlying trend as higher in EUR/USD, due to strong Fed easing and improving global macro data but the US fiscal cliff negotiations remain the key event risk - and a dollar-positive one at that”.

According to Axel Rudolph, Currency Strategist at Commerzbank “ Last week’s EUR/USD bounce ran out of steam between the 1.2800 level and the 200 day moving average at 1.2808. The 1.2661 current November low is thus once again in view. Failue here will push the symmetrical triangle downside measured target at 1.2483 to the fore”.

The research team at the Australian bank Westpac emphasizes the EU finmin meeting to be held tomorrow, arguing “If Greece’s lenders grudgingly pay up on Tuesday then the euro should find some support. Further out though, we would sell into the low 1.29s as recession weighs and Spain remains under pressure”.

The Swiss UBS has now revised up its bearish outlook for the euro to neutral. “The pair has upside potential to clear 1.2802 and move towards 1.2884. Support lies at 1.2662 ahead of 1.2608”, concluded analyst Gareth Berry.