EUR/USD has rallied. It is trying to break through a major dynamic resistance. It is trading at 1.1290, a valid breakout above the dynamic resistance will bring a great long opportunity. The dollar dropped as the US Dollar Index plunged again.

The USD could recoup its losses only if the US unveils strong data. If so, the EUR/USD pair may approach and reach new highs. The failure to reach the 1.1167 low or to make another lower low has brought another bullish momentum.

EUR/USD has registered another false breakdown below the 1.12 level. Now it is testing the upper median line (UML). A valid breakout above the UML will confirm a further increase on the Daily chart.

The first upside target is represented by the 1.1422 former high, EUR/USD could approach this level if it consolidates above the upper median line (UML). You should be careful today because the breakout above the upper median line (UML) could be invalidated if the US publishes strong economic data and the USDX jumps higher.

• EUR/USD Trading Tips

Long deals can be opened if EUR/USD makes another high and price jumps and closes above the 1.1348 level. The R2 (1.1573) could be used as an upside target on the Daily chart. The former Falling Wedge pattern has signaled a potential continuation of the upside movement after the minor retreat.

A short opportunity could appear if EUR/USD registers another false breakout above the UML or if it decreases and drops below the 1.1167 level.