EUR/USD Imminent Upside Breakout

EUR/USD rallies in the short term and it could validate a larger upwards movement soon after making a new higher high. It is trading at the 1.1866 level and aiming for the 1.19000 psychological level.

USDX is going down like a rock again as the US data has disappointed in the previous days. Unfortunately, the CPI and the Core CPI increased only by 0.0%, less than expected, while the Core PPI has registered only a 0.1% growth versus the 0.2% estimate. Moreover, the Prelim UoM Consumer Sentiment dropped unexpectedly from 81.8 to 77.0, even if the traders have expected to see an increase to 82.1.

EUR/USD is still trapped within a sideways movement, range, but its failure to drop towards the 1.1611 downside line signals an upside breakout and a bullish continuation. The pair has escaped from a down channel, it has retreated a little and now it seems determined to jump above the 1.1920 former high.

A new higher high and a valid breakout above the R1 (1.1921) validated a strong upside movement, swing higher. The false breakdown with great separation below 1.1611 level signals that the downside is over and that EUR/USD should climb higher.

EUR/USD has found support on the S1 (1.1746) level and now has ignored the PP (1.1833) signaling strong bulls. We could have a great long opportunity if the pair jumps, closes, and stabilizes above the 1.1900 psychological level.

The R3 (1.2096) could be used as an upside target if EUR/USD makes a new higher high. An upside valid breakout could signal an approx 270 pips potential upside movement.