Forex: EUR/USD, 1.28 is key pivot; EU Nov 20 FinMin meeting eyed (Barcelona) - The Euro has been able to stretch its subtly constructive outlook vs the US Dollar for yet another session in Asia, as market continues to keep bids on the latter to a bare minimum. EUR/USD approaches now Europe stuck at the technical-sensitive 1.2760 area, with Euro dip buyers having been active since the bottom recorded at 1.2660 on November 13.

The US Dollar has been trading on the back foot after the increase in risk appetite following last Friday's first formal talks between Democrats and Republican to resolve the threatening 'US fiscal cliff'. The negotiations yielded some hopeful bipartisan commentaries, with Treasury Secretary Geithner venturing to suggest that while still a few weeks away, a deal will be done.

The prospect of no agreement on the 'fiscal-cliff' is expected until at least mid-December, according to Sean Callow, FX strategist at Westpac, noting that "fits our view that the two sides are starting negotiations from rather distant points", and as such, "there will be plenty of negative headlines in coming weeks that weigh on Treasury yields and boost USD, which is yet again trading like a safe haven even when the bad news is generated by the US" Sean adds.

In Europe, the next risk event will be on Tuesday, November 20, when Euro area finance ministers meet to find a temporary agreement for Greece. Joerg Asmussen, member of the European Central Bank, told German broadcaster ZDF over the weekend, EU leaders should agree on a 2-year loan extension for Greece.

For today, EUR related economic agenda for the London session ahead looks soft, with only Italian industrial production at 09:00 GMT. However, several conferences in the EU will take place in parallel, ahead of tomorrow's key Eurogroup meetings.

The special attention will be headlines from EU Commissioner Barnier and Spain EcoMin De Guindos, speaking at the EU conference on financial stability and the single market at 08:30 GMT. Also Deutsche Bundesbank President Jens Weidmann speech in Frankfurt at the same time will attract market's attention.

In the EZ sovereign debt auctions front, France will deliver Treasury bills at 12:45 GMT, with 10 year bond yields stable around the 2% figure, last at 2.08%.

Technically speaking, Marc Chandler, Global Head of Currency Strategy at BBH, still retains a favorable outlook for the US dollar, saying "we are concerned that in the near-term, the bulls have over-reached."

Mr. Chandler remains cautiously bearish, and highlights the importance of the break of the $1.28 with the subsequent consolidation below. According to the analyst, 1.28 houses the 200-dma and also the neck line of the double top pattern.

"The minimum target after last week's downside break, Mr. Chandler notes, is around $1.2450, which is just beyond the 61.8% retracement of the euro's Q3 rally. "If euro moves above there the price action ought to be respected" Mr. Chandler adds.

In-house analyst Valeria Bednarik also point at 1.28 as the key area to respect in EUR/USD: "Having been capped by the 1.2800 area these past days, that’s the level to beat to see some upward momentum towards the 1.2880 price zone. Bulls will get in trouble if price falls below the 1.2690 level, with 1.2660 as immediate support ahead of 1.2610" she said.

For the first few hours of London, immediate resistance to the upside for EUR/USD shows at recent session highs 1.2773, followed by Thursday's highs/200 day SMA at 1.2800/10, and Oct 26/29/30 lows-Nov 11 highs at 1.2875. To the downside, support lies at Nov 12 highs/recent session lows 1.2738, followed by Nov 08 lows at 1.2690, and Nov 13 lows at 1.2656.

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