On June 13th when the Euro was around 1.20 and on June 24th when the Euro was around 1.22, I postulated the Euro (which at the time was hated) could see a bounce to 1.30. Well we are at 1.30. We are getting close to where it makes sense to potentially starting shorting the Euro. I think a 1.33 to 1.35 handle is possible but at this point I wouldn't bet on it.
This is like the counter trend bounce from the March 2009 lows for the equity market. I tend to be early with respects to when I think it could be over (I did start getting really bearish on the equity markets again around August / September of 2009 only to be really early). So the Euro may have further to go but I think we are closer to the top than the bottom (for that statement not to be true the Euro would have to rally above 1.40). You have the banking stress test results this Friday. This Euro rally could be buy the rumor sell the news sort of thing. Or it may cause the final spike.
With Hungary over the weekend, rumors of problems in some European banks, and overnight rates that continue to creep up, it shouldmt be long (days to a few months) before the Euro starts heading lower in earnest.