Forex: EUR/USD rallies to 1.3390 on ECB's Praet remarks on monetary policy (Barcelona) - The EUR/USD fell down to 1.3348 low on the European opening, retracing all gains made earlier in the day, but ECB's Praet comments triggered a new flow of risk sentiment up to 1.3375, and then to 1.3390 session high despite weaker figures in the EMU industrial production indicator.

ECB's Praet defended its current monetary policy as appropriate as policymakers stopped self-reinforcing downward spiral, despite the remaining downside risks to growth. Working those issues of “fear” are more important than cutting interest rates, he said.

EMU industrial production fell from -3.3% to an annualized -3.7% in November (consensus of -3.2%), with a monthly contraction of -0.3% (consensus of -0.1%). The EUR/USD is back at 1.3375 zone.

“The target is at the level of 1.3500, which is also considered as a target level of the third wave”, wrote analyst Igor Sayadov. “Later, in my opinion, the pair may start a correction to return to the level of 1.3080. In order to do that, the pair has to form a pivot point and form a reversal pattern”, he wrote.