By: Hillel Fuld

 The EUR hovered directly under a key level vs the USD on Wednesday, affected by profit-taking after it hit an 11-week record, while the AUD decliens as inflation data pared the chances of an interest rate rise next week.

The euro was flat at $1.2994 failing to hold above the psychological and technically crucial level of $1.30 after it rose to a high of $1.3045 on Tuesday. The $1.30 level coincides with a 61.8 percent Fibonacci retracement of the euro's selloff since the middle of April.

Near-term resistance for the euro is seen at the May 10 high of $1.3095, followed by $1.3125, which is a 38.2 percent retracement of the December-June move.

"The euro has been rising on short-covering until recently. But it will probably need new factors to keep its uptrend going, which I don't see now," said Etsuko Yamashita, chief strategist at Sumitomo Mitsui Banking Corp.

But a number of commentators see more upside, based on the resilience of the euro zone economy. On the other hand, skepticism remain over the ability of the U.S. economy to avoid a sharp slow down.

Chartists say a sustained break above the $1.30 level could place the euro in a new $1.30-$1.35 range in the weeks to follow.

"The euro continues to flutter about $1.30, while levels such as $1.3094 loom large as thresholds that would spark further unwinding of euro short positions," David Watt, RBC Capital Markets senior strategist, wrote in a note.