So far, the one-way street, abrupt upward moves are characteristic of a market driven by 'stop loss hunting' as illiquid conditions persist ahead of Tokyo, HK opens. Buying accelerated since the Moody's affirmation of Spain rating and as a result, firming risk seeking conditions. At this juncture, seems fair to think that Sept 17 trend high at 1.3172 will now come into play.
In House Technical Chief Valeria Bednarik agrees on higher targets being eyed; "The EUR/USD hourly chart show indicators aiming back north after correcting extreme overbought readings, with 20 SMA now around 1.3020. In the 4 hours chart, indicators hold in positive territory, although not reflecting latest run higher. The upward momentum seems quite strong now that the pair trades above 1.3070, former monthly low, with scope for a retest of 1.3172 this Wednesday."
For the technical enthusiastic ones, the latest run-up occurs after the completion of an immaculate pullback to a broken descendant trend line coming from 1.3172 September high.
According to Chris Adams , Financial Times Markets Editor: "Moody's non-downgrade is good news for the market. It's a vote of confidence in Madrid's actions and gives Spain space to apply for ESM line, which it will do."