The euro staged an impressive rally on Tuesday propelled by optimism Spain is closer to request an official bailout. The stronger move came after Bloomberg reported Germany is open to Spain seeking a precautionary credit line from Europe's rescue fund (ESM). EUR/USD broke above several resistances, including a bear-trendline connecting 1.3170/1.3070 peaks, and rose as high as 1.3060 on the news. However, the cross stalled just shy from its Oct high of 1.3070. Short-term studies remain supportive, but a consolidation phase could precede fresh strength as the pair corrects from overbought readings in hourly charts. A break above the 1.3070 level would turn the outlook even more positive and open the way to 1.3100 en-route to September's double top at 1.3172.
On the other hand, loss of the 1.3000 psychological level could see a further correction that should be contained by the 1.2980 area to keep bulls in play. Below this latter, 1.2950 could offer further support.View Live Chart for EUR/USD