The EUR/USD is technically poised to move higher after breaking above its 10-week range of 1.12-1.15, but the lack of fundamental justification and the usual fate of start-of-the-year consensus trades call for caution.
There is a growing belief the USD will have to fall in Q1 due to the dramatic dovish turn in Fed expectations after recent Fed comments emphasizing caution and flexibility nL1N1ZA01A.
The 1.1500 break should see EUR/USD test the 200-day MA (1.1629 today) and a break above targets the Sept 24 trend high at 1.1815.
Yet it is difficult to predict gains beyond 1.1815 barring a big change to the fundamental backdrop.
The latest data suggest the U.S. economy is maintaining upward momentum with an unambiguously strong December non-farm payrolls report nUSN4CEFP2, while the euro zone economy is struggling.
Fears Germany might be headed into a recession increased after shockingly poor IP data Tuesday nL8N1Z810G.
The consensus heading into 2018 was that EUR/USD would rise as 'synchronized global growth' spurred a convergence of central bank policies.
The pair did surge to 1.2556 from 1.1995 between Jan 1 and Feb 16, before slumping dramatically to 1.1500 by June 1.
A similar pattern wouldn't surprise in 2019.