Forex: EUR/USD at 1.3470 highs, might close week above 1.3400 (Barcelona) - The EUR/USD is currently capped at 1.3470, but buying pressure remains strong and the price is still close to the daily highs. The NY session is at its opening, but little is expected from the US economic calendar, only with US new home sales at 15:00 GMT keeping investors attentive.

TD Securities analysts explained why the new found strength in the EUR/USD: “Since QE programs began in 2008, the relative size of the Fed and ECB balance sheets has been strongly connected with the level of EUR/USD, so the notion that the ECB’s assets are shrinking while the Fed’s are still expanding at a decent rate is fairly significant”. Earlier in the morning, the ECB announced a larget than expected LTRO repayments from Eurozone banks. Market consensus was pointing to €100B repayment of the December 2011 loans, but officials reported a €137.2B, starting on January 30.

“Break above midlines on the 4h chart indicators, supports the current action and sees room for extension higher, with initial targets at 1.3485, 2012 high and 1.3500 zone, 50% of larger 1.4938/1.2042 descend / weekly 200 day MA”, wrote Windsor Brokers analyst Slobodan Drvenica, pointing to initial supports at 1.3370/50. “Weekly close above 1.3400 required to confirm bulls”, he added.