We retain a positive bias for EUR/USD at the start of a new trading week after the exchange rate broke out higher and the Eurozone economy continues to show improving strength.

The Euro-to-Dollar exchange rate has broken higher again, dismissing the possibility that the pair was forming a topping pattern as had previously been thought.

It is possible to see the outline of a descending channel in the pair's recent activity; although recently it broke out higher from the channel.

According to technical theory channel breakouts usually move as far up as the height of the channel (marked 'a') extrapolated higher from the point of the break ('b').

Such a move would probably lead to a target at about 1.1925, subject to confirmation from a move above the 1.1861 highs.

"We are consolidating under the 1.1850-1.1880 region that held last month. If pullbacks are corrective for another leg higher then we should see a higher low develop in the 1.1780-50 region. A decline through 1.1730-1.1695 would negate the current bull momentum and suggest a lower range is developing between 1.1550 and 1.1880," says Robin Wilkin, an analyst with Lloyds Banking Commercial Banking.

Long-term, Wilkin believes 1.0350 was a major low for the exchange rate, "which completed the cycle from the 1.60 2008 highs. This should see an eventual move back towards 1.30-1.35, but for now, we look for medium-term consolidation under 1.21-1.23, with 1.15-1.12 important support in this regard."

Data and Events to Watch for the Euro

The first important event for the Euro could be a speech by European Central Bank (ECB) President Mario Draghi on Monday at 9.00 GMT, although little new information is expected regarding monetary policy. However, be aware that Draghi might spring a surprise.

The same goes for the release of the ECB minutes on Thursday, November 23 at 12.30.

"There probably isn’t much new information to come in these minutes," say TD Securities."The only information that we’re waiting for in Dec is some of the QE details, like the fraction of purchases going to govt bonds vs corporates, so look for a muted market reaction," added the Canadian investment bank.

Purchasing Manager Surveys are the other major release for the Euro in the coming week.

Both Manufacturing and Services are out at 9.00 on Thursday.

"In Europe, the surprising strength of the Eurozone PMI data has been gradually confirmed by official data, and flash November PMI numbers will provide a reliable guide to whether the recent growth surge has persisted into the fourth quarter," says IHS Markit, the official compilers of the data.

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Data and Events for the Dollar

It is a quiet week for US data, and the US public holiday Thanksgiving falls on Thursday, November 23, which means most traders in New York will be off on Friday too to bridge the weekend.

Rather than lead to sluggish trading, however, research shows that the Friday after Thanksgiving has a propensity to being highly volatile.

"Low liquidity makes it extremely easy to exacerbate the volatility that we have been seeing in the currency market. In 2007 and 2006, the EUR/USD’s trading range on the Friday after Thanksgiving was more than 3 times its trading range on Thanksgiving Day," says BK Asset Management Managing Director Kathy Lien.

The main news release will be the minutes of the last (November) Federal Open Market Committee (FOMC) meeting, at which the central bank convenes to decide whether to change interest rates or not.

Whilst analysts will be keen to see if the discussions contained shed any further light on the projected path of interest rates, minutes do not usually surprise and are not normally market moving.

"Markets all but fully expect a Dec rate hike, with around 1.5 hikes priced for 2018. Thus we expect the market to largely look past debates around Dec in the Nov FOMC minutes as old news," said TD Securities.

Federal Reserve Chairwomen Janet Yellen is also set to make a speech at 23.00 GMT on Tuesday, November 21, but again she is not expected to reveal any new information, although the risk is that the market will get a surprise in the form of a more pessimistic assessment, rather than the other way around.

On the hard data front, Durable Goods orders are out at 13.30 on Wednesday and November business activity data, in the form of Purchasing Manager Surveys (PMI) are out on Friday at 14.45.

The Manufacturing PMI is expected to show a rise to 54.9 in November from 54.6 in the previous month, and Services PMI to rise to 55.6 from 55.3 previously.

A strong rise in November PMI data will probably support the Dollar although expectations are already high for a December interest rate hike (circa 90%) so more strong economic data is unlikely to improve the chances any more than they already are.