EUR/USD: Focus on Fed minutes and yield differential

• The immediate outlook on EUR/USD has turned bullish, courtesy of an inverse head-and-shoulders breakout on the 4-hour chart. 
• Dollar selling may gather pace, bolstering the already bullish setup in EUR/USD if the Fed minutes reveal a strong consensus on the need to change the pace or halt balance sheet normalization, if required. 

The path of least resistance in EUR/USD is now to the higher side. 

The currency pair jumped above 1.1333 yesterday, confirming an inverse head-and-shoulders breakout on the 4-hour chart. That pattern represents a transition from lower highs - lower lows to higher highs-higher lows and is widely considered a sign of bullish reversal. 

The bullish breakout has opened up upside toward 1.14 and that could level could be put to test and possibly breached in the US session, if the Fed minutes, scheduled for release at 19:00 GMT, reveal growing consensus among the policymakers that balance sheet could be used as a tool, if economic conditions warranted. 

The minutes are also likely to reiterate the "wait and watch" approach on interest rates counseled by Fed's Powell last month. That, however, has been priced in by markets. 

Falling wedge on 10-year DE-US yield differential

The spread between the 10-year German (DE) and US government bond yields is currently seen at -254 basis points. Notably, it has created a falling wedge  - a bullish reversal pattern on the daily chart. A break above -252 basis points would confirm a wedge breakout and open up upside toward the recent high of -240 basis points. A rise in DE-US yield spread could bode well for EUR/USD. 

EUR/USD Technical Levels