EUR/USD is gravitating towards the centre of its current range and may keep doing so until December.
The restraint on a bigger rally is the number of traders who have bet on that eventuality and the rapid pace of July gains has led to a period of consolidation and a correction to an overbought situation.
Traders have shown little interest to take a profit during this phase and the number of longs continues to limit EUR/USD strength.
An eventual but slowly developing paring of bets is likely.
It will depress EUR/USD but probably not far below the base of the current 1.17-1.20 range.
The big risk for traders is year-end.
With so many traders holding euros and year-end often resulting in a dollar shortage there is risk of a disorderly exit if the current number of longs is held until December.
Even so support levels that really matter are much lower and the uptrend should be resumed after longs are significantly reduced.
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