The EUR/USD pair rallied in the short term as the Dollar Index resumed its sell-off. Now, the DXY reached major support represented by 97.73. It remains to see how the index will react around this level. A new leg higher may boost the USD and force the pair to drop. A valid breakdown may push the pair higher.
Fundamentally, the Euro received a helping hand from the German Prelim CPI today. The economic indicator rose by 2.5% versus 1.6% expected. On the other hand, the ADP Non-Farm Employment Change was reported at 455K as expected, while the Final GDP registered a 6.9% growth versus 7.0% estimates.
EUR/USD bullish bias
EUR/USD found strong support at 1.0960 signalings that the downside is limited. Now, it has managed to pass above the descending pitchfork's upper median line (UML), above the uptrend line, and above 1.1121 signaling strong buyers and potential further growth.
At the time of writing, the pair was challenging the weekly R1 (1.1160). A valid breakout above it may announce an upside continuation. As you already know from my previous analysis, a valid breakout above the UML and above 1.1121 could confirm more gains.
EUR/USD Outlook!
Stabilizing above 1.1121 and making a valid breakout above the R1 (1.1160) could activate an upside continuation and could bring new long opportunities. In the short term, you have to be careful as the level of 1.1186 represents an upside obstacle as well.
Also, don't forget that a major bearish engulfing pattern could invalidate a larger upwards movement. DXY's bullish reversal could force the pair to drop again.
