EUR/USD rallied today as the Dollar Index plunged after the FOMC. Now, it's trading at 1.1114 level right below 1.1137 today's high. Technically, the price reached a strong upside obstacle, that's why we'll have to wait to see how the price will react.
Surprisingly or not, the USD dropped even though the US Unemployment Claims declined from 229K to 214K last week below 221K expected. The Housing Starts was reported at 1.77M above 1.70M estimates, Industrial Production rose by 0.5% matching expectations, while the Philly Fed Manufacturing Index was reported at 27.4 points above 15.1 points expected.
EUR/USD Up Channel!
EUR/USD jumped above the 1.1121 static resistance but it has failed to stay above it. Technically, after such an impressive rally, a temporary retreat is natural. As you can see on the H4 chart, the price action developed an up-channel pattern.
The upper median line (UML) stands as an upside obstacle as well. So, only a valid breakout above 1.1121 and through the UML could announce a potential upside reversal. As long as it stays under these levels, EUR/USD could drop anytime.
EUR/USD Outlook!
From the technical point of view, the up-channel could represent a bearish pattern. False breakouts above the near-term upside obstacles could announce a new leg down. In the short term, a temporary drop is natural after its amazing rally and after reaching the 1.1121 obstacle.
After a minor retreat, the EUR/USD could come back higher to challenge the immediate resistance levels. A valid breakout above the upper median line (UML) could activate a larger growth and could bring new long opportunities.
