After nearly a month of consolidation, the pair finally found reason to break out of its recent trading range. The US CPI data was a catalyst for a push to the upside but that owes more to dollar weakness than the euro getting things together. In any case, the shove higher is a new technical development and as traders, we always have to respect that.
EUR/USD managed to break above its 50.0 Fib retracement level at 1.0283 but the gains fell short of breaching the 61.8 Fib retracement level at 1.0361 and the 1.0400 mark. Those are now key resistance levels to watch before any potential return back to 1.0500 and the 100-day moving average (red line) just above that at 1.0530 currently.
For now, dollar bears are in control again after winning the tug of war over the past few weeks. But there is more work to be done and given the euro's lack of optimism, they won't be getting much help from the single currency.
If there is to be another leg higher, it's going to have to come from further dollar selling in general. As such, trading sentiment will be key in driving price action and for now, traders are still feeding off the weaker dollar from yesterday. But again, watch out for the key resistance levels pointed out.