FXstreet.com (Córdoba) - The euro finally broke its range against the dollar to the upside, surging to fresh 11-month highs on Friday propelled by news that 278 eurozone banks would repay to the European Central Bank a total of €137 billion of the initial 3yr LTRO loan next week.

The stronger than expected German IFO reading fueled EUR optimism, helping EUR/USD to break above the 1.3400 resistance level and the range that held for the last two weeks.

Meanwhile, stocks rose in Europe and the US as ECB news and strong earnings reports offset weaker-than-expected US housing data.

But why the euro benefited from ECB news? According to the Societe Generale team, the euro's strength is not a measure of relative national virility or economic growth. "It is supported by the fact that the ECB's balance sheet is falling while the Fed's is growing, and global investors are buying high-yielding Euro assets after a long period of shunning them", they explain. "In the long run, the economic divergence between Europe and the US will be reflected in a weaker EUR/USD rate, but not now".

Euro gains momentum, 1.3485 key level

EUR/USD pushed higher, turning the short-term outlook decisively bullish, and printed a fresh 11-month high of 1.3478, just shy of its 2012 high and immediate target at 1.3485. The positive bias will likely persist as long as the pair holds above the 1.3400 psychological level, while loss of the 1.3360 zone, could confine the pair to a new consolidation phase.

"The pair has nearly tested the 2012 high of 1.3485, above which 1.36 comes into view", says the TD Securities team. "EUR momentum is also strong on the crosses and to us most look to be buy on dip type trades at the moment".

Analysts at Wells Fargo share the view that more gains could be expected in EUR/USD. "With near-term event risk looking to be relatively low, there is some potential for recent foreign exchange trends to continue", says Nick Bennenbroek, Head of Currency Strategy at Wells Fargo Bank. "Further euro gains are possible, while we maintain an overall upward bias for commodity and emerging currencies".