Following a short-lived pullback, EUR/USD resumed the upside and hit a 5-day high of 1.3475 supported by Draghi's upbeat comments on Spain and a positive turnaround in stocks markets.
Meanwhile, the Japanese yen reversed weakness after a G7 official said markets had 'misinterpreted' a joint statement issued earlier in the day and signaled concern at excess yen moves. "With conflicting comments surrounding today's G7 statement and also surrounding the yen, there could be a slight bias towards strength in the very near-term", said Nick Bennenbroek, Head of Currency Strategy, Wells Fargo Bank.
EUR/USD with key resistance at 1.3475/85
The euro strengthened in the wake of the G7 statement and Draghi's comments, reaching a high of 1.3475, extending its recovery from 1.3352 where it bottomed last Friday. A sustained rise above 1.3475/85 should help the shared currency to gain traction, while above 1.3500 the short-term picture would improve. Failure to the upside and loss of the 1.3350 area could accelerate losses with 1.3300 as next target followed by 1.3255.
"Note that as price nears 1.3475-80 area, it encounters not only the channel resistance but a previous support/resistance pivot. A break above this will be needed to clear the channel and bring about some bullish outlook, especially if it can extend above the 1.35 psychological handle", says Fan Yang, analyst at FXTimes. "This can put pressure on the 1.36 and 1.37 clips, which were also resistance pivots before".
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