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Euro/dollar topped the 1.30 line, reaching the highest level in three weeks. If this holds, the 1.3080 is the next challenge.

Fresh optimism regarding a haircut deal between private bondholders and the Greek government was replaced by optimism that a deal could be done, sooner than later.

Reports about these talks varied recently, so this could turn against the euro. The break isn’t confirmed yet.

Another boost for the common currency came from a report about German flexibility regarding the permanent bailout fund: the ESM. While Germany still opposes enlarging the fund, it is ready to allow the current EFSF fund to run together with the ESM.

1.30 is an important psychological barrier. If the break is confirmed, the 1.3080 line is next. It provided resistance on the first days of 2012.

A failure to hold this line will find the euro challenging the 1.2945 line, which is a pivotal line in the range. Much stronger support is at 1.2873.

For more on the euro, see the EUR/USD forecast.

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