EUR/USD finally gets its breakout, so what’s next?

It’s been coming for a while already and the dam has finally given way. The pair has been knocking on the door of the 1.0500 mark numerous times in the past few weeks but at last, buyers chose pounce on the opportunity to kill two birds with one stone. Not only did they take out the stubborn resistance at the 1.0500 level, but also the 100-day moving average (red line).

That allowed for a big shoot up in terms of price action as the pair comes up for some air to breathe.

The news from Germany overnight here also played a helping hand but a mostly weaker dollar is also part and parcel of the equation.

So, what’s next for the pair?

From a technical perspective, we’re now running into the December high of 1.0629 and that’s the next key resistance point in play now. But as buyers look to build on the upside momentum, the next key target will arguably be the 200-day moving average (blue line) – seen at 1.0725 currently.

But on the week itself, the dollar side of the equation is going to offer up some key risk events. The US jobs report and related data in particular are going to big ones in balancing out dollar sentiment further on the week. So, just be wary of that.

For the euro, the ECB policy decision is on the agenda but it will be a case of cutting by 25 bps then pausing at least for the next meeting. So, it should be a rather straightforward one all else being equal.

The 50.0 Fib retracement level of the swing lower since September last year is seen at 1.0695 and over time, it should narrow with the 200-day moving average as noted above. So, that will see a key resistance region of around 20-30 pips near 1.0700 as the next key target area for buyers in this latest move.

This article was written by Justin Low at www.forexlive.com.