Positioning reports reveal leveraged funds have pared EUR longs, bringing positioning to levels last seen at end March/early April that provided the springboard for higher EUR. In the short-term, trendline support from November 2020’s 1.1603 lows is slowing down EUR/USD’s more recent decline from 1.2349. According to Benjamin Wong, Strategist at DBS Bank, 1.1695-1.1705 remains pivotal support levels as range hemming becomes apparent.
EUR bullish position has been trimmed
“The intent of trading community over the last three months where leveraged funds clearly pared longs. Position wise, EUR is back to end March/early April, where the market then found a meaningful low at 1.1704 and subsequently led EUR back to recover back to a 1.2266 high.”
“Europe is shaking off its laggard approach on covid vaccination; where Germany, Italy, and Spain are now ahead of the US in terms of population percentage receiving at least one vaccine shot. As the vaccination activity advances, EUR would have to take notice of the positivity of the reopening of Europe.”
“EUR’s recent decline is slowing as it approaches a trend support line drawn from 1.1603, the mid-November lows. The technical indicator is no longer overbought, having donned a 4.5% decline from the 1.2349 highs, and there are a multitude of support staggered into 1.1705 that sites March lows and in deference to 1.1695, the 38.2% Fibonacci retracement of March 2020’s 1.0636 lows-January highs at 1.2349.”
“EUR’s descent lower from 1.2262 has been led by an ostensible bearish head-and-shoulders top. But the obvious message is really that of a range consolidation. The weekly chart’s Bollinger Band prescribes a 1.2258-1.1705 range but EUR’s downside pace is starting to recede as ranges coil up.”
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