Just a quick update to point out that EURUSD just reached our next upside target of 1.24.  In our last major update [see: Jan 18 Update on EURUSD] we identified this as the backtest of an alternate IH&S Pattern neckline as well as the top of the rising white channel which has guided the pair higher since the previous rising broke down in October 2016.But, it’s been on our radar since EURUSD broke out of a falling channel on Dec 29 [see: A Good Start?]

Same caveats as USDJPY:

(1) DXY isn’t quite to our target range of 88.423-88.682, and it has the potential to drop to 87.4 if the Fed doesn’t panic right on schedule.

(2) With all the rhetoric surfacing in the White House and at Davos, an overshoot is a distinct possibility.  And, with Draghi scheduled to pontificate tomorrow, anything could happen.

continued for members…The big picture shows the next higher target at 1.2597, which could be on hold until April if DXY gets a bounce here — only to return later to tag its channel bottom.If the neckline holds, of course, 1.2597 won’t happen.  Or, the red channel top tag could wait until October, when the neckline intersects it.  But, I like the fact that the channel top and the white .618 intersect fairly close to the neckline.  My gut tells me there will be a wicked spike higher to tag 1.2597 sooner or later.

If EURUSD should keep going here, things could get pretty ugly in a hurry.  The falling red channel from 2006 would be yielding control to the rising white channel — which would mean some pretty nasty repercussions for DXY.

The next really serious resistance would be the white channel midline which is currently around 1.40 — about where EURUSD was when it broke down in early 2014.