Forex Flash: What to expect of EUR/USD? – Commerzbank, Rabobank and UBS (Barcelona) - Despite the advance in risk aversion overnight, intensified after the poor Chinese Non-manufacturing PMI result, the EUR climbed to levels shy of 1.2940 after mixed results in the services PMI readings in euro zone members.

K.Jones, Head of FICC Technical Analysis at Commerzbank, comments that the favoured scenario depicts a decline to the trendline suppport at 1.2687 in case the market runs out of steam in the 1.2960/1.3000 region. “But at this point should a recovery thrugh 1.3050 be seen, we will have to allow a retest of 1.3173/77”. The expert remarks that significant resistance levels lie at 1.3466/1.3542

With the Spanish bailout request in centre stage, J.Foley, Senior Currency Strategist at Rabobank argues “Investors will not wait indefinitely and it is very possible that it will take another surge in Spanish bond yields to provide Rajoy with the reason to finally request aid. As a consequence we continue to see scope for pullback in the EUR on a 1 mth view”.

And G.Berry, analyst at the Swiss bank UBS, maintains the bullish stance on the single currency, suggesting “Initial resistance is at 1.2988, a break above would signal fresh extension of gains to 1.3031 and then 1.3085. Support lies at 1.2804 ahead of 1.2758”.