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Apr 12 - 06:55 AM

EUR/USD - COMMENT-Traders Ready For EUR/USD To Drop - That's Key

By Jeremy Boulton  —  Apr 12 - 04:55 AM

Speculators who bought almost 20 billion euros when they were gambling on the currency's rise in December had unwound almost the entire position before this week's meeting of the European Central Bank - and that really matters.

Traders bought low and sold high - they made money - and since selling out of these positions, the euro has fallen further reaching a fresh 2024 low at 1.0674 EBS in the wake of the central bank meeting.

A lot is being made of the unlikely possibility of a great divergence between U.S. and eurozone monetary policy which could drive EUR/USD toward parity.
While not impossible this is highly unlikely, and speculators who have traded very well likely know this.

Instead of selling low and try to profit from a rather unlikely outcome, traders who profited from betting on a rise might buy lower, and return to the positions that have rewarded them.

This is the more logical trade and it is in keeping with an uptrend that has endured since September 2022 - and specs know the trend is their friend.
This trend has been refreshed by a fairly modest correction, and without big bets to restrain it, EUR/USD may rise again.

Flight to safety may change the face of FX markets.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary

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