FXstreet.com (Barcelona) - It seems that the sirens rung when the cross has pierced – although for a few moments – the psychological level of 1.2800 in yesterday’s session. As the euro failed to follow through, the rally’s was sapped and a subsequent decline started, falling back to the comfort zone in the middle of the range.

What would the euro do without bullish, but seemingly soulless rumors? Politicos recurred once more to the rhetoric everybody in the FX community knows. Fresh news is sorely needed, or better said, solid ones. Greece and Spain have retired from the headlines… temporarily. The European Commission has ruled out further austerity measures in Rajoy’s country and Greece continues in a dangerous wait-and-see mode, while its politicians struggle to bring calm to the house. But the main catalyst was the preliminary GDP figures in the euro zone during the third quarter. This last contraction has confirmed that the 17-nation bloc has slipped back into recession, and of course, it does not bode well for the economic activity prints of the fourth quarter.

Today’s euro docket lacks of relevance and glamor. Maybe industrial production across the pond would ignite some reaction in EUR/USD via the greenback, in a context where the US ‘fiscal cliff’ is waking up more and more concerns every day among market participants.

… How realistic is 1.2750?

More relevant than 1.2750 are the levels around 1.2800, where the 200-day moving average sits, apart from its condition of psychological barrier.
Axel Rudolph, Currency Strategist at Commerzbank, assesses the cross would struggle to surpass the area of 1.2800, adding that upsides would find strong resistance in the 1.2877/93 region (short term downtrend and 55-day moving average). “We remain overall negative. Last week EUR/USD broke down from a symmetrical triangle which offers a downside measured target to 1.2483”.

In the meantime, the Bullish Percentage Index developed by researchers at FXstreet.com has just printed above the 50% threshold. At the moment, the BPI is showing that 63.16% of euro-based pairs are on bullish mode, according to point and figure patterns.

… Moving forward to Monday

Extremely light docket awaits investors on Monday in both Europe and the US, as EMU Construction Output and Existing Home Sales in the latter are due.