Bullish break in EUR/USD - Rabobank

Hawkish comments from ECB President Draghi provided EUR/USD with sufficient upside momentum to break above the early June daily tops at 1.1285/84, notes Piotr Matys, EM FX Strategist at Rabobank and suggests that the June 2016 high at 1.1428 will remain a valid short-term target as long as a corrective pullback, which may unfold following a very impressive rally on Tuesday, is limited by the important support at 1.1285/84. 

Key Quotes

“The 2016 high at 1.1616 set in May will be the next key level to watch if market expectations that the ECB will gradually reduce its unprecedented monetary policy stimulus continue to rise in the coming months.”

“Despite its strong rally so far this year, EUR/USD remains stuck in a sideways trend that has been in place since the second half of 2015. To expect a sustainable reversal of the move lower from the 2014 high to the 2015 low, EUR/USD would have to break above the Fibonacci 38.2% retracement at 1.1736 and the August 2015 high at 1.1714.”