EUR/USD: can it climb even higher?

The eurodollar, one of the most liquid pairs out there, is extremely popular with traders. Its dynamics influence the entire forex - it is said that when it's in a range, the entire currency markets consolidate.

For months the eurodollarhas been consolidating between 1.1050 and 1.0775. It all ended a few weeks ago (ten trading days ago, to be precise), when the pair broke through a major plateau, trading at 1.13 on Monday. However, could this push it higher?

What's behind the eurodollar's bullish breakout?

First of all, the European Next Generation Fund, announced a few weeks ago, is enjoying growing momentum. With the British no longer possible candidates to vote against the new debt deal, there is a growing chance that the French and German proposal for shared European debt will succeed.

From a technical perspective, the eurodollar has been consolidating in a triangular pattern for most of this year. It broke higher, acting as a reversal pattern, and now price action continues to form higher, common peaks in an uptrend.

There are already voices calling for 1.19 sooner rather than later, but a cautious tone is more appropriate. From a short-term perspective, this week's Eurogroup meeting on the 11th could create a pause in the eurodollar's bullish momentum. In a longer-term perspective, investors should remember that Germany takes over the EU presidency this summer for the next semester.

For the time being, fundamental and technical aspects favor a continuation of the uptrend. However, the increase in the ECB's printing of money increases the long-term risks for the euro.

In the future, the focus will be more on central bank actions than on technical aspects. On the 10th, the Fed will give more clues on its vision of the economy for the coming period, and the dollar side of the equation will weigh on the eurodollar exchange rate this week.

If the market considers the Fed to be more dovish than the ECB, expect the eurodollar to continue its rally.