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EUR/USD resumed its post EU Summit run in the New York session and marched through more resistance lines. It still has some room before tackling the post Greek elections high – a line that was challenged more than once.

The mood remains positive after the EU Summit and before portfolio managers scramble to adjust positions as the week, month, quarter and half year draw to a close. Merkel’s speech in parliament is also critical. Updates.

Italy, Spain and France managed to secure concessions from Germany’s Angela Merkel: they agreed that the bailout mechanisms could buy bonds at the markets and recapitalize banks.  However, thse are pending approval and contain conditions. There are at least 5 holes in the statement.

Big Move

EURUSD Leaps Before Angela Merkel Talks After EU Summit June 29 2012
EURUSD Leaps Before Angela Merkel Talks – Click image to enlarge

EUR/USD leaped from the bottoms of the 1.2440 line to resistance at 1.2624 and retreated. The New York session sent it to another boost, and the pair now trades above the 1.2670 line, after falling short of 1.27.

The really important level is 1.2748 – the level reached after the Greek elections. Then, the rally didn’t last too long, and consecutive attempts to breach this line failed, making it even stronger now.

Today’s euro-rally is the biggest seen since July 2010. Perhaps the pair is losing steam after the big leap.

End of month, Merkel talks

Things may get very choppy very soon, given the date: many portfolio manages are busy to adjust their portfolios of stocks, bonds and commodities at the end of a period – the end of June comes on a weekend this year.

A break above 1.2748 will be a bullish sign, but this is still too be seen.

A big risk factor is a speech by Angela Merkel at the German parliament later in the day. She is heavily criticized for making concessions in the summit. If Merkel will defend her position and push for the ratification of the ESM, the markets will likely cheer.

If she downplays the agreement and focuses on the conditions and the bumpy road ahead, a correction may certainly come.

For more, see the EUR/USD forecast.