EUR/USD breaks above 1.18 for first time since Jan. 2015

The EUR/USD pair's technical upsurge in the NA session carried it over the 1.18 threshold for the first time in more than 31 months. As of writing, the pair is trading at 1.1815, 15 points below its recent peak of 1.1830, up 65 pips, or 0.55%, on the day.

After spending the majority of the day in a tight range around the opening levels, the pair gathered momentum right around the London closing amid month-end flows and gained nearly 50-pips in a matter of minutes. After the initial reaction, the pair consolidated its gains for the next hour but gained traction once again to break above the 1.18 mark. The move seems to be a product of the greenback's weakness with the US Dollar Index plummeting to its lowest level since May of 2016. At the moment, the index is at 92.85, losing 0.36% on the day.

The last data of the day from the U.S., Dallas Fed Manufacturing Business Index, improved to 16.8 in July from 15 in June but failed to help the USD recover its losses as it was largely ignored by the participants. On Tuesday, the economic calendar will feature Markit Manufacturing PMI and Q2 GDP growth from the euro area ahead of the Core Personal Consumption Expenditure Price Index, the Fed's favorite inflation gauge, from the U.S. The market expects the Core PCE Price Index to remain steady at 0.1% on a monthly basis in June.

Technical outlook

Technical indicators for the pair are giving overbought signals at the moment, suggesting that a short term technical correction could be underway. 1.1870 (Jan. 11, 2015, high) could be the initial hurdle for the pair ahead of 1.1950 (Jan. 4, 2015, high) and 1.2000 (psychological level). On the downside, supports are located at 1.1720 (daily low), 1.1620 (Jul. 21 low) and 1.1500 (psychological level).

• EUR/USD weakness expected to stay short-lived – Danske Bank