EUR/USD runs into a congested 1.23 area, where next?

• EUR/USD has set fresh highs in the think markets today with the US out on a long weekend.
• The market is looking for a test of the 1.23 big figure today.

US Dollar Index continues under pressure, at 3-year lows

In the wake of a weaker dollar (-0.62% and working through technical support, eyes 200M MA at 88.295) and hawkish ECB minutes from December's meeting, the news that Germany is making headway towards a coalition party and how Berlin and Paris have stepped up push for eurozone reform deal, all those fundamentals have set the sails for euro bulls at the start of the week.

A case for a higher euro still?

The real meat on the bone, however, is that the EZ economy is improving and investors are expecting some catch up with the Fed from other Central Banks, both of which is propelling EUR/USD higher on the charts. 

"Bloomberg’s survey noted that the Eurozone economy is expected to grow 2.2% this year – the third month in a row that the consensus has become more constructive on the growth outlook and the sixth forecast upgrade in a year. The improving fundamental outlook is expected to trigger a moderation in ECB forward guidance as soon as Feb which supports the outlook for a fairly robust EUR performance moving forward," explained analysts at Scotiabank.

EUR/USD levels

EUR/USD is a leans with a highly bullish bias, although the price has run into a congested area on the weekly sticks. "We expect firm support on dips to the low 1.22 area and continue to view minor EUR dips remain a buy. More broadly, having traded well through 1.2167 retracement resistance last week, we think EURUSD should continue to rally towards the 1.25/1.30 range," argued analysts at Scotiabank.