Interesting technical formation in the EUR/USD

Traders watching key level for a breakout opportunity.

Charts (3)

The US Dollar was bearish against most of its major pairs on Tuesday with the exception of the NZD and CAD.  

On the economic data front, the National Federation of Independent Business' Small Business Optimism Index increased to 100.6 on month in June (97.8 expected), from 94.4 in May. The Consumer Price Index rose 0.6% on month in June (+0.5% expected), from -0.1% in May.

On Wednesday, the Mortgage Bankers Association's Mortgage Applications data for the week ending July 10th is expected. Empire Manufacturing for July is expected to spike to 10.0 on month, from -0.2 in June. Industrial Production for June is expected to rise 4.4% on month, from +1.4% in May. Finally, the Federal Reserve's Beige Book is expected to be released.    

The Euro was bullish against all of its major pairs. In Europe, the U.K. Office for National Statistics has reported May GDP at +1.8% (vs +5.0% on month expected), industrial production at +6.0% on month (as expected), manufacturing production at +8.4% (vs +8.0% on month expected) and trade balance at 4.3 billion pounds (vs 800 million pounds deficit expected). ZEW survey results of July were released for Germany at -80.9 for current situation vs -65.0 expected, investment confidence was published at 59.3 vs 60 expected. The German Federal Statistical Office has posted final readings of June CPI at +0.6% (vs +0.9% on year expected). The European Commission has reported May industrial production at +12.4% (vs +15.0% on month expected). 

The Australian dollar was bullish against most of its major pairs with the exception of the EUR.

Looking at major movers, the EUR/USD jumped 55 pips to just over the 1.14 level in Tuesday's trading. Breakout plays are one of my favorite plays as a trend follower. A cup and handle continuation pattern may be forming. Price action has been consolidating since the prior uptrend took a pause. A break above key resistance at 1.1423 (Green line) could pave the way for a momentum trade towards March highs around the 1.1495 level and could signal a resumption of the uptrend in the EUR/USD.

Source: GAIN Capital, TradingView

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