On Tuesday, the euro and the pound reached new highs versus the dollar, while currencies linked to commodities like the AUD and the CAD edged lower after the RBA said mining investment had likely peaked. Meanwhile, the greenback continues to trade above 84.00, near its 8-month high versus the yen, as the Japanese currency weakened amid speculations the BOJ could ease its policy further on Thursday.
"While trading conditions are somewhat thin and could contribute to some unpredictable moves, our bias is for further foreign currency gains in the near-term", says Nick Bennenbroek, Head of Currency Strategy at Wells Fargo Bank.
EUR/USD gathers momentum and overcomes 1.3200
The euro managed to take another step higher and printed a fresh 7-month high of 1.3209 against the dollar during the New York session, although bulls are struggling to sustain moves. However, the upside remains favored at this point, and only a break below 1.3125 could threaten the short-term bullish bias.
According to the TD Securities team, the EUR still looks to be well supported from a technical point of view, and the relentless grind higher should continue. "A new high in EURUSD, albeit marginal, was the latest constructive signal for the bigger picture. Ignoring fundamentals, the EUR still looks to be a buy on dips with an underlying trend that looks quite strong", they add.