EUR/USD rose on Monday, probing the 0.9775/0.9820 resistance zone as softer U.S. rates EDH3 weighed down the dollar, with the gains increasing the risk of a short squeeze toward parity or above.
EUR/USD's fall from the Oct.
4 daily high halted and reversed near the 76.4% Fibo retracement of the 0.9528-0.9999 rally.
Trends that approach 76.4% retracements frequently reverse course.
Daily charts show the right shoulder of a head-and-shoulders bottom forming.
A break and sustained hold above 0.9775-0.9820 resistance, where the 10- and 21-day moving averages as well as Oct.
7 and 14 daily high sit, would complete the pattern suggesting a move toward parity is possible.
Deeply oversold monthly RSI, which is close to turning upwards, reinforces risks that shorts may be squeezed.
If U.S. yields stabilize, equity ESv1 gains persist and volatility .VIX continue its fall from recent highs, EUR/USD should have a greater opportunity to rally.
A rally towards bigger resistance in the 1.0340/70 zone is possible should EUR/USD bulls overcome 1.0000/50 resistance, which would likely trigger stop-loss buying.
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