On Monday, EUR/USD rose to register a daily close above the Ichimoku cloud top, which remains at 1.1064, increasing the risk of a short squeeze in coming sessions.
In the week ended Nov.
12, IMM data showed the futures market was short by an equivalent EUR/USD cash position of 7.2 billion euros, down from 7.6 billion euros the previous week.
However, EBS flow data since Nov.
12 shows some of those shorts may have been re-established, increasing the chances of a near-term short squeeze because there are more buy stops around that might be triggered.
If EUR/USD bulls force a daily close above the kijun line, at 1.1085, that will further increase the likelihood for more gains to retest the October 1.1180 peak.
EUR/USD direction is at the mercy of the Federal Reserve FOMC's October minutes due out on Wednesday and Friday's release of flash euro zone PMIs nL1N27Y00C.