The recovery and move higher for the euro is being driven by one sentiment. Relief. Relief that for the time being, the Catalan situation has been pushed to the back burner, and whilst this may be true in the short term, longer term the situation in Spain remains a thorny issue and one which has the potential to drive volatility into the single currency and create seismic shifts in the EU longer term. This morning, the Catalan President announced he has now received a mandate to pursue independence from Spain, but then went on to say this would not be implemented for a few weeks, with EU bureaucrats and the euro drawing a collective sigh of relief and providing some upwards momentum as a result.

From a technical perspective the saucer shaped price action of September and early October suggests further gains for the euro on this timeframe with the next key level being a move through the 132.20 area of resistance which now lies ahead, and on to test the 133 high of late August. In the longer term much will now depend on how the Catalan situation is resolved but for the time being, sentiment for the euro remains positive.