The euro is making new highs for the cycle against the dollar even as stresses in the European banking sector remain.  The post-ESFS high from May 10 at around 1.3090 is being tested today, and improved sentiment suggests this level will eventually give way.  Peripheral bond spreads continue to narrow, but we note that 3-month EURIBOR continues to creep higher and was fixed today at another new high for this cycle and at its highest level (.833%) since the summer of 2009.  EURIBOR rates have been rising steadily since April, due in large part to perceived jump in counterparty risk.  Given the continued spread tightening in the periphery, the upside for the euro is likely to remain intact for now.  From a technical standpoint, clean break of 1.30 was the final 62% retracement level of the euro’s April-June drop, and points to a test of the April high around 1.3700.  Resistance is seen first at 1.3199.Euro