The EUR/USD rallied and increased significantly in the last hours. Price has erased the today’s gains and seems motivated to reach fresh new highs in the upcoming days. The rate has remained in the buyer’s territory and should resume the minor rebound as the USDX drops like a rock on the Daily chart and could reach fresh new lows in the upcoming days.
The dollar index has failed to stay above a dynamic resistance, that’s why the USD is losing ground versus all its rivals. Personally, I’ve predicted that the USDX will drop again on the short term because it was under massive selling pressure. USDX could reach and retest a dynamic support before will try to start a larger rebound.
The Euro-zone data have come in mixed today, the Euro dropped after the figures were sent to the public. On the other hand, the US data have come in mixed as well, the CPI rose by 0.5%, beating the 0.3% estimate and the 0.1% growth in the former reading period, while the Core CPI increased by 0.3%, more versus the 0.2% estimate. Unfortunately, the retail sales data have disappointed, the Retail Sales indicator dropped by 0.3% in January, even if the traders have expected to see a 0.2% growth, the Core Retail Sales increased by 0.0%, less versus the 0.5% forecast.
The greenback has started to drop sharply after the US Business Inventories indicator was released, it has increased by 0.4%, more versus the 0.3% estimate.
The EUR/USD has made a false breakdown below the median line (ml) and the 50% Fibonacci line (ascending dotted line) today, signaling that it could climb towards at least till the 1.2537 highest high. It could also be attracted by the upper median line (uml) of the minor ascending pitchfork. A failure to make new highs or to reach the upper median line (uml) will signal an exhaustion and a potential larger drop.