By Vicki Schmelzer

NEW YORK (MNI) - Renewed risk-appetite sent the euro back over $1.5000 Monday, with market players looking for a retest of the 2009 highs near $1.5064, seen October 26, either this week or next.

The euro's inability to decisively break above $1.5000 was viewed as only a short term negative, with upcoming eurozone data and next week's European Central Bank meeting expected to provide fodder for a new rally.

Euro-dollar was trading at $1.4977 in afternoon action, after holding in a $1.4834 to $1.5001 range.

From a technical perspective, the euro's new rejection of its 55-day moving average, (at $1.4787 Monday) earlier, suggested scope for further gains.

"From here, minor resistance is seen at $1.5014, but $1.5047 to $1.5064 are seen as pivotal levels," said Nick Shamim, Market News International's technical analyst.

The $1.5014 represents the November 11 peak and $1.5060-64, the highs posted both October 23 and October 26, he noted.

"The medium term outlook remains constructive whilst above the two-month support line at $1.4774 - rising 10 pips per session," Shamim said.

Big-picture euro bulls said the euro will need to break decisively above the October peaks and maintain a toe-hold over $1.5100, before upward momentum can mount.

The euro could then move into a new range of $1.5000 to $1.5300 into year-end, or could press even higher if an end-of-year lack of liquidity combines with new dollar sell interest.

"I think the risk is we get to $1.5500 sooner than we think," said Steve Barrows, senior currency strategist at Standard Bank in London.

Standard has a three-month euro forecast of $1.5500 and a six-month euro forecast of $1.6000.

This week's eurozone data (German November IFO business sentiment index, Belgian National Bank November business sentiment index, etc), if on the topside of expectations, could provide the euro with a short-term lift.

However, market players may be reluctant to push a new trend too far heading into U.S. Thanksgiving Day holiday and the December 3 European Central Bank meeting.

"It's still not a data driven market," Barrow said.

The market looks for the ECB to leave the benchmark minimum refi rate unchanged at 1.0% at next week's meeting.

Various ECB officials, including ECB President Jean-Claude Trichet, have said that the central bank will discuss exit strategies more intensely at the December 3 meeting and the market awaits ECB insight on the subject.

"As you know, in its last meeting the Governing Council of the ECB has judged the present level of our policy rates as appropriate," Trichet said Monday at a financial conference in Madrid.

"As regards our non-standard measures, as the situation returns to normal times, the focus on the medium term calls for a gradual and timely phasing out of these measures," he said.

"As of today, it is still premature to declare the financial crisis over, but when the appropriate time comes, there should be no concern about the ECB's determination and ability to exit," he remarked.

"Looking ahead, not all our liquidity measures will be needed to the same extent as in the past," Trichet said. "Accordingly, we will make sure that the extraordinary liquidity measures taken are phased out in a timely and gradual fashion and that the liquidity provided is absorbed in order to counter effectively any threat to price stability over the medium to longer term."

Standard Bank's Barrow maintained that next week, the market will home in on any comments relating to the ECB's December 15 repo-tender.

Trichet may use the accompanying statement or the Q&A session that follows to relay the ECB's plans about the repo, he said.

"At that point, if he knows what the ECB wants to do and he wants to convey that to the market, he can do that," Barrow said.

"My suspicion is that they will hedge around a bit," he said.

If the ECB's comments next week suggest that the 12-month repo would be the last or that the term is moved to six month or if a premium is applied to the repo, market players may interpret the remarks to mean that an ECB rate hike would be pushed forward, analysts said.

If eurozone interest rates rise in response to what is perceived to be ECB intentions, then the euro would likely press higher also, they said.

Earlier Monday, Trichet would not comment on whether there would be a spread on the 12-month tender, stating only, "We are committed, of course, to having the one-year operation."

In related comments Monday, ECB Council Member Ewald Nowotny said the central bank had not yet decided whether the ECB will tack a premium onto the 1% fixed rate at December's 1-year auction, and that the decision will depend on events in the economy.

"We all know that the ECB has guaranteed in its program a 12-month tender auction," he said. "The details will be decided in December."

Nowotny was asked how the ECB could ensure that bids at the December one-year auction didn't swamp the market with a new flood of surplus liquidity.

"We assume that banks and markets know themselves what is reasonable," he replied. "We are looking at the tender that we will discuss in December with a look at possible developments in 2010."

He added, "We also know that in the summer of 2010, a large tender will run out" -- a reference to the E442 billion worth of repos provided to banks in the June one-year auction.

Nowotny noted that, "One-year tenders are just part of the entire liquidity product of the ECB. One has to see them as a whole."

In September, the ECB drew E75 billion for the twelve-month tender, well down from the E442 billion seen in June.

Next week's ECB statement and Q&A session, if rate neutral as expected, is unlikely to have a sustained impact on the euro sentiment, said Michael Woolfolk, senior currency strategist at Bank of New York Mellon.

Even if there is some suggestion about December 15 repo-tender, the ECB will probably also stress in comments that "rates are on hold for the foreseeable future," he said.

Bank of New York has an end-of year euro target of $1.5500, and saw scope for a move to $1.6000 in 2010, Woolfolk said.

"If the Fed delays longer than necessary, say into the summer, then we think this ($1.60) is a distinct possibility," he said.

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