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May 20 - 10:55 AM

ANZ: We're Short EUR/USD with a Target of 1.07; Rationale and Risk

By eFXdata  —  May 20 - 09:30 AM


ANZ outlines their strategy and reasoning for adopting a short position on EUR/USD, targeting a movement towards 1.07. The analysis focuses on the current supportive technical environment for the USD, and potential risks that could impact the position.

Key Points:

  • USD Rebound Potential: There is a perceived greater likelihood of a USD rebound compared to a significant EUR/USD rally beyond 1.10, given the current technical support levels for the DXY.
  • Market Focus on US Inflation: Market sentiment is currently heavily influenced by US inflation data, suggesting that strong US PMI price gauges could notably sway FX movements more than headline activity data.
  • Technical Analysis: Daily moving averages are currently supporting EUR/USD, although historical trends show that the pair has crossed these averages with relative ease. The Relative Strength Index nearing overbought levels could indicate a potential reversal.
  • Risks to Position: Key risks include the potential for unexpectedly strong EU PMI data coupled with much weaker US PMI outcomes, which could undermine the long USD position and impact the viability of the short EUR/USD strategy.


While the short EUR/USD position is supported by technical analysis and a focus on US inflation data, significant risks remain, particularly from potential disparities in PMI data between the EU and the US. These factors could challenge the anticipated movement towards 1.07, and traders should remain vigilant to shifts in market sentiment and economic indicators

ANZ Research/Market Commentary


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