The EUR/USD pair rallied at the time of writing as the Dollar Index plunged after Fed Chair Powell's statement. This was seen as a high-impact event, that's why the volatility is high. The euro drags the rate higher despite the fact that the Italian Retail Sales registered a 0.4% drop versus 0.3% growth expected.

The USD dropped also because the IBD/TIPP Economic Optimism fell from 48.4 to 44.7 points while specialists expected potential growth to 50.2 points. The unexpected drop indicates pessimism. The EUR/USD pair rallied but it remains to see how it will react tomorrow around the US inflation data publication.

EUR/USD strong upside pressure

EUR/USD continues to be trapped between 1.1386 and 1.1273 levels. It has failed to reach and retest the uptrend line and the 1.1235 signaling strong buyers and upside pressure. It remains to see how it will react after reaching 1.1374 and the 38.2% retracement level.

Technically, only a valid upside breakout from the current range, above 1.1386 could confirm an upside continuation and a bullish reversal. Staying below the immediate upside obstacles, registering only false breakouts, or developing a bearish pattern could signal that EUR/USD could turn to the downside.

EUR/USD outlook

As long as it stays under the 1.1374 - 1.1386 area, EUR/USD could still develop a larger downside movement. Escaping from the 1.1386 - 1.1273 range could bring great trading opportunities. Jumping, closing, and stabilizing above the 1.1386 could represent a buying opportunity.