The EUR/USD is now giving away earlier gains, slipping back from highs beyond 1.3680 to the current area near 1.3670. After dipping to sub-1.3500 levels in early February, spot managed to gather traction and recover the 1.3600 handle on the back of better risk sentiment and ECB inaction. “The improved fundamentals in the EZ suggest that the EUR will yield ground reluctantly and that EUR/USD could struggle to break below the EUR/USD1.30 level this year. A robust EUR, however, will not be welcome at the ECB. If deflationary risks do increase in the EZ, Draghi may still be forced to take decisive policy action. In these circumstances, the EUR could still be sent sharply lower”. The pair is now advancing 0.19% at 1.3672 with the next resistance at 1.369 (high Jan.28) ahead of 1.3716 (high Jan.27) and then 1.3721 (daily cloud top). On the flip side, a breakdown of 1.3615 (30-d MA) would target 1.3611 (100-d MA) en route to 1.3609 (low Feb.10).