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Jun 24 - 11:55 AM

EUR/USD - COMMENT-EUR/USD Shorts Should Tread Cautiously

By Christopher Romano  —  Jun 24 - 09:40 AM

EUR/USD has failed to sustain momentum in recent rallies toward the daily cloud base and 50% Fibo retracement of the 1.0774-1.0359 fall, but positioning, technicals and Fed expectations warn of a potentially serious short squeeze.

CFTC data indicate euro positions flipped from net-long in early June to net-short now, while EUR/USD has fallen since then, but without breaking key 1.0330-60 support.

Failure to break that support soon could lead EUR/USD bears to surrender, cutting positions and, thus, bolstering EUR/USD.

Technicals highlight upside risks, with EUR/USD above the 10-day moving average and consolidating gains off the June 15 daily low, which could resolve with the rally resuming and a test of 1.0750/1.0800.

Terminal Fed rate expectations should also underpin EUR/USD.
Despite Friday's slight back up in rates, Eurodollar prices EDZ2 are trending higher as investors reduce terminal rate expectations and pull forward the timing of the first Fed rate cut.

Price action after disappointing German Ifo data nL8N2YB1Y7 should concern shorts, with EUR/USD falling only marginally while German-U.S.
2-year spreads US2DE2=RR widened.

Failure to break below 1.0330/60 soon could lead to a short squeeze.

For more click on FXBUZ


Source:
Refinitiv IFR Research/Market Commentary

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