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Nov 18 - 01:55 PM

EUR/USD - COMMENT-EUR/USD Squeeze Is On Even As US Data Spotlights Downside Risks

By Christopher Romano  —  Nov 18 - 10:18 AM

EUR/USD extended its rally off Wednesday's low on the back of broad dollar selling, in a short squeeze that has room to continue despite downside risks highlighted by U.S. data on Thursday.

Another drop in U.S. weekly and continuing jobless claims nL1N2S8280 indicated the job market continues to recover solidly.

Upbeat November Philly Fed business conditions nN9N2Q300G reinforced views that the economic recovery persists, while increases in prices paid and new order indices heightened concerns about inflation, which could prompt the Fed to hike rate sooner than investors expect.

Continual upbeat U.S. data should underpin the U.S. rate market and the dollar.

Technicals indicate the short squeeze risk will remain.
A long-legged doji candle formed Wednesday and daily RSI diverged on that low.
Those signals were followed by a rally, with daily RSI turning up from oversold territory.

Monthly EUR/USD technicals remain negative, however, and longer-term bears might look to sell rallies, but for now a rally towards the 10-DMA and 1.1465/90 resistance could be possible.

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Refinitiv IFR Research/Market Commentary


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