EUR/USD Surges Unexpectedly – Is the Trend Reversal Confirmed Above 1.1200?

EUR/USD Analysis – Post-1.1200 Breakout Consolidation Phase: Searching for the Next Direction

Overview (May 14, 2025)

Following the release of the US CPI data, EUR/USD broke above 1.1200 and is currently hovering around 1.1185. On the 1-hour chart, the price remains above both the 50-hour and 200-hour moving averages (50MA and 200MA), suggesting that the uptrend remains intact from a technical standpoint. The ADX (Average Directional Index) stands at a high level of 68.77, indicating a strong trend. The DMI (Directional Movement Index) shows +DI above −DI, confirming that buying pressure remains dominant. Additionally, increasing volume is reinforcing the reliability of the current trend.

Key Point 1: Support Function of Moving Averages

Currently, EUR/USD is trading above both the 50MA and 200MA, continuing its short-term uptrend. In particular, the 50MA is acting as a support level, helping to hold the price during pullbacks. The 200MA has also turned upward, indicating strength in the medium-term trend. As long as these moving averages continue to provide support, the uptrend is expected to remain intact.

Key Point 2: Strong Trend Signaled by ADX and DMI

The ADX remains at a high level of 68.77, signaling the presence of a strong trend. Generally, an ADX above 25 suggests a trend is forming, and above 50 indicates a very strong trend. In the DMI, +DI remains above −DI, confirming that buying pressure dominates. This combination suggests a continuation of the uptrend and may provide a good opportunity for buying on dips.

Key Point 3: Rising Volume and Trend Reliability

Volume increased during the breakout above 1.1200, supporting the strength of the buying momentum. Typically, rising volume accompanying rising prices strengthens trend reliability. Although volume has slightly declined during the current consolidation phase, this can be interpreted as temporary profit-taking or dip-buying wait-and-see behavior. If volume increases again as the price rises, it would suggest a potential resumption of the uptrend.

※Image Source: cTrader platform

Future Outlook and Trade Strategy

EUR/USD may diverge based on the following key levels:

• Sustainability of the 1.1200 Breakout: If the price clearly breaks and holds above 1.1200, the next target could be in the 1.1245–1.1260 range.
• Support Zone of 1.1165–1.1170: If this zone holds, it could offer a good entry point for buying on dips.
• ADX Trend: If the ADX exceeds 70, it may signal trend overheating. Conversely, if the ADX begins to decline, it could suggest trend weakening.

Trade Scenarios

Bullish Scenario (Trend Continuation)
Entry: Long position after confirmation of 1.1205 breakout
Target: 1.1245–1.1260
Stop-loss: Below 1.1175

Buy-the-Dip Scenario (During Consolidation)
Entry: Long position after confirming rebound at 1.1165–1.1170
Target: 1.1200–1.1220
Stop-loss: Below 1.1150

Countertrend Scenario (Short-Term Correction)
Entry: Short position after confirming resistance around 1.1200
Target: Around 1.1170
Stop-loss: Above 1.1215

Conclusion:

EUR/USD remains in a strong uptrend technically. Multiple indicators such as moving averages, ADX, DMI, and volume suggest bullish momentum, supporting strategies like buying on dips or trend-following after a breakout. However, attention must be paid to possible trend exhaustion or correction risk, and proper risk management is crucial when trading.

Disclaimer:

This article is intended for informational purposes only and does not constitute a recommendation to buy or sell any specific financial instruments. All trading decisions should be made at your own discretion.
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