The impressive rally, which commenced in the second half of March this year, took the EUR/USD to highs just above 1.20, not seen in the past couple of years. The uptrend, however, lost steam around the aforementioned psychological level.
With the pair currently consolidating between 1.1750 and 1.20, markets are keenly awaiting to see which direction the next breakout is going to be in. We firmly believe that the euro’s ascent against the greenback is far from over. An eventual violation of the 1.20 psychological resistance will open the way for another impulsive way upwards. Once this happens, the EUR/USD will target 1.2415, en route to the key 1.2550.
In order for this bullish scenario to remain valid, the major should keep trading above the crucial 1.1705-1.1750 support zone. A potential breakout below 1.17, which is not our preferred scenario at this point, would put the whole uptrend from 1.1165 to an end.