EUR/USD rallied and reached fresh new highs as the USD was punished by the USDX’s massive drop. Technically, it should resume the bullish momentum after the breakout above the 1.2091 previous high. The rate is strongly bullish on the short term, is somehow expected to take out the near term resistance levels and should reach fresh new highs.

The dollar index seems unstoppable on the short term, has plunged and now is located below the 91.02 former low. USDX is expected to drop further because is attracted by a dynamic support, remains to see how will react when will hit this level. The Euro increased even if the Euro-zone data didn’t impress, the Italian Industrial Production rose by 0.0%, less versus the 0.6% estimate and versus the 0.6% growth in the former reading period, while the French Final CPI surged by 0.3%, matching expectations.

Unfortunately, the greenback wasn’t inspired by the United States data, the Core Retail Sales have increased by 0.4%, more versus the 0.3% estimate, while the Core CPI increased by 0.3%, beating the 0.2% estimate and the 0.1% growth in the former reading period. The CPI increased by 0.1%, matching expectations, but the Retail Sales have disappointed because have increased only by 0.4%, less versus the 0.5% estimate.

The currency pair reached the median line (ml) of the minor ascending pitchfork where has found temporary resistance. It should climb much higher after the impressive rally, the next upside target will be at the 50% Fibonacci line (ascending dotted line). Only a valid breakout above the 50% Fibonacci line will signal a further increase in the upcoming weeks.

Only a false breakout above the mentioned resistance level or a failure to reach it will signal a minor drop at least till the lower median line (lml) of the minor black ascending pitchfork. We may have a buying opportunity after a valid breakout above the 505 Fibonacci line.