Will the bulls take EUR/USD to 1.33 this week?

Technical analyst Luc Luyet at MIG Bank today warns that the euro rally could be soon to run out of steam:

"Short-term oscillators are approaching overbought conditions. Coupled with the significant resistance at 1.3417, the short-term upside potential is likely limited.

MIG Bank note that EUR/USD is however moving in a broadly sideways pattern after the break of the resistance at 1.3254 was achieved. Traders are urged to monitor the support at 1.3253 and the resistance at 1.3297.

However, we note analysts at UniCredit Bank are decidedly more bullish on the euro today:

"EUR-USD has room to rally above 1.33 this week, now the 1.3242 level has been broken and because we see the ECB President Mario Draghi staying put on rates. Hence, we simply favor long strategies here."

US GDP data, US Fed to be key driver of Euro Dollar exchange rate this week

Today, the calendar is again thin. There are only some second tier eco data scheduled in Europe. In the US, the pending home sales are the only data release.

"So, investors will look forward to the important data and events that are expected later this week with the US Q2 GDP and the Fed-decision on Wednesday, the ECB meeting and the US ISM of the manufacturing sector on Thursday and the Payrolls on Friday. The market is taking a cautious stance on the dollar going into those events," says Piet Lammens at KBC Markets.

The daily agenda this week will be heavy but only from Wednesday onwards, with US 2Q13 GDP, the FOMC, ECB and BoE meetings and US labor data.

Lammens says range trading is thus likely to prevail today and tomorrow.

Politics: Current level of the euro is not a problem

There have been a few moves on the political front with B.Coeure and J.Asmussen calling for the ECB to publish minutes while stating that they do not see the euro as being overvalued.

In a joint interview, ECB board members J.Asmussen and B.Coeure called for more transparency by releasing minutes of governing council meetings.

They believe publishing names, votes and the substance of discussions would help the institution to improve communication, just as establishing a monthly press conference did at the beginning of the euro.

They do not think that governors would come under pressure from their nationals as they already have a European mandate. Discussions at the governing council are underway, but there does not yet seem to be a consensus on the topic.

Talking about banking union, both board members believe that this is probably the most significant evolution since the inception of the euro and that it will help to clean up the European banking sector, allowing for further defragmentation and catch-up with other regions, such as the US.

They do not believe the current level of the euro is a problem as such or that the euro area is heading for deflation, repeating that inflation expectations appear to be well anchored.

Finally, they mention that a joint seat at the IMF for France and Germany would be an interesting next step toward political integration, opening the way for a single seat for the EA (Le Figaro).