MUFG Research discusses EUR/USD technical outlook and notes that prices look stretched but not extreme yet.
"The move higher for EUR began about 50 trading days ago – 18th May was the first clear day marking a turn higher. Friday marked the 50th trading day since then – on a 50- day % change basis, the EUR/USD 7.7% higher on Friday was the largest gain over that period since April 2011. But when we analyse momentum based on z-scores, we see the 3-week % increase is a little over 2 standard deviations from the average over the last 12mths – not particularly extreme. So technically, we are certainly entering stretched territory although perhaps not yet compellingly so,"MUFG notes.
"But what we find most significant about this EUR move is the lack of evidence of leveraged speculative buying of the euro. Given the scale of the move is certainly notable, the lack of pick-up in demand amongst leveraged speculative market participants is most notable," MUFG adds.