EUR/USD is adding to the day's gains even after a round of mixed data from the euro zone, with Fed Chair Powell's dovish commentary from Friday keeping the dollar weak and setting the tone in markets.
Powell's message that Fed policy is not on a preset path is keeping U.S. interest rate futures prices firm, and appears to have triggered a reduction in long dollar positions, with the greenback under pressure against most major and emerging market currencies. EUR/USD is now trading solidly above the 10-DMA and looks set to test 1.1494/1.1515 resistance.
The top of a rising wedge pattern, November high and daily cloud top sit in that zone.
Should bulls test and break that resistance EUR/USD short covering could extend the rally towards the 200-DMA and 1.1625/50 resistance.
EUR/USD bulls are likely to tread cautiously though as minutes of the ECB's December policy meeting are released this Thursday.
The minutes should give more clarity on the ECB's cautious stance or possibly reveal deeper concerns facing the euro zone economy.
A 1.1515 break will likely be difficult for now.
chart: Click here