The EUR/USD has entered a period of consolidation after what has been a strong run-up in the last few weeks. At the moment we are still consolidating between 1.2200-1.2300.

One of the major drivers has been the weak USD. We’ve seen a similar chart pattern on the US Dollar Index (DXY), where price is consolidating between 90.40 and 91.00. I feel that the USD is ripe for further downside and similarly, the EUR/USD is therefore likely to see another leg higher.

This week we have the ECB Interest Rate decision. Rates will likely be on hold, however, any changes to QE are what will be the headline. I, in fact,t we start seeing further tapering or even talk of that taking place, the EUR should appreciate.

Add to that a weak USD, and the potential remains to the upside from a fundamental level.

Key Upside Target

I’m still eyeing off a move to the 1.2500 level. I think we will certainly see more downside in the USD and that alone will be enough to get us there.

If the ECB gives us any hint of what we want to hear, then there will be another even more important driver. Either way I think 1.2500 will be taken out in the near future.