The down trend was signaling exhaustion on the last impulses. It dropped under 1.3 level but couldn’t go any further, possible reversal was signaled by the technical indicators (divergences on oscillators and important support levels) and price action.
The good economic data from yesterday brought the confidence in Euro Zone back for the investors. The bond auction for France and Spain went very smooth, the yields dropped for both of them at 2.10 and respective 4.92. The stress test was a success, 17 out of 18 US banks could withstand a deep recession. But the trigger for the up move was actually the conference held by Mario Draghi, and the optimism in his tone regarding the strengthen of the Euro economy helped by better exports.
Coming back to the chart we can see a big bullish candle that got all the way back to the trend line. The close of the last trading session was over the last 4, meaning that the Euro got at the highest level in one week. A close over the trend line would confirm now the breakout over the RSI trend line, and could open the way to even higher levels. The target for this up move would be the zone near the 1.3270 key level.
We will keep on posting new updates on the new evolution of the EURUSD.