The euro is trending higher, but the growing consensus that the dollar will fall in all possible scenarios is a red-flag warning that a correction might be closer at hand than the market anticipates.
The latest IMM data show net dollar shorts climbed to $30.4 billion in the week ended Dec 29 while net EUR/USD longs stood at $21.875 billion, reflecting the market's view that the trend will continue in 2021 nL1N2JF1YI.
New Year conviction trades have a tendency to reverse sharply when unexpected events cloud the outlook. The U.S. state of Georgia holds runoff elections for both Senate seats later on Tuesday.
The market is pricing in a Republican win in at least one race, which will ensure Republicans retain control of the Senate.
Reports of large early voting numbers along with distractions emanating from President Trump's unfounded election fraud allegations suggest the results are too hard to call nL1N2JF1PI.
Dollar bears believe the USD will fall no matter which party controls the Senate nL4N2JB246.
But if Wall Street is forced to reprice in the event of a Democratic sweep, volatility will surge and could encourage flows back into the safe-haven dollar.
EUR/USD has topped out at 1.2300-10 the last three trading days and a break above that area would technically validate the bullish case.
Conversely, a fall below the 21-day moving average at 1.2193 would suggest a correction lower is underway.
For more click on FXBUZ
eur Click here