After bottoming at 1.2825 on Thursday, the Euro has been trading in recovery mood against the US Dollar to close the week at 1.2955, just 60 pips below its opening at 1.3015 on Monday.

Said that, the EUR/USD remained well within its recent range as eurozone optimism picks up ahead of the weekend. Why? While the timing of a Spanish bailout remains highly uncertain, there is growing consensus that an aid request is more likely than not after S&P downgraded Spain's rating.

The EUR/USD rose as high as 1.2991 in the European session but after the US opening bell the pair ran out of steam and it began to trade sideways between 1.2945 and 1.2955. The COT report shows this week a EUR net short of 73K vs 50K the previous. "I'm surprised to see the market jump back so eagerly into EUR shorts but that tells me that smart