With the conditions that halted EUR/USD's rally in July alleviated, and the ensuing correction laying the foundation for bigger gains, the pair is well placed to continue its rise.
In July, when expectations for a peak in the U.S. tightening cycle intensified -- EUR/USD rose over the peak of the 20-Week Bollinger Bands leading to an overbought situation that was duly corrected.
Traders were equally stretched with bets on a rise exceeding 25 billion dollars before the reverse that has seen bets reduced by around $7 billion.
The slow slide from July's 1.1276 peak to September's 1.0686 low is evidence of profit taking and not the disorderly and rapid event that occurs when traders exit losing bets.
This is vital as profitable positions are often re-established.
EUR/USD's rise ahead of U.S. CPI data and an ECB meeting where there's a 69 percent chance of a rate hike may be sign of a move back into long positions.
It is notable that after a correction that got close to the target for a minimum technical correction of the rise from 0.9528 in September 2022 to this year's high, the pair is close to the base of the 20-week Bollinger Bands.
A better balanced market is apt to revert to its trend.
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