Currency traders are usually guided by the profitability of their bets and if that is the case EUR/USD may head higher before dropping.
Since June traders have successfully staked a lot of money on EUR/USD dropping with the pair falling from 1.1909 to 1.1685 since jobs data was released on Sept 3 and the Federal Reserve outlined policy yesterday.
They have profits to book and cause to do so because EUR/USD did not break to a new 2021 low and option vols have dropped since, lessening the probability of that happening. nL1N2QP0GG
Should profit taking take hold EUR/USD is likely to return to neutral ground that's represented by the centre of the 20-day Bollinger bands at 1.1797 and the gravitational pull of a daily Ichimoku twist at 1.1804.
The net EUR/USD bet remains long, however, and having narrowly avoided a stop chase below 1.1664, traders may be inclined to pare these bets, weighing on any recovery and potentially pushing EUR/USD into a lower range towards 1.15-18. nL1N2QO0FW
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