EUR/USD bears should note that buy stops associated with growing short positions might be triggered.
In the week ended July 23, the futures market was short an equivalent EUR/USD cash position of 4.88 billion euros, more than the 3.92 billion euros the previous week, IMM data showed.
EBS flow data since July 23 shows those shorts may have been added to, increasing the vulnerability of the upside.
The technical outlook has shifted as EUR/USD left a large lower shadow on Thursday's daily candlestick, reinforcing the increased risk of a bigger reversal higher.
EUR/USD's near-term scope is for gains through the tenkan line, now at 1.1119.
A daily close higher will unmask the 1.1174 Fibonacci level, a 38.2% retrace of the 1.1412 to 1.1027 (June to August) drop.
If key U.S. data is disappointing, that will add the likelihood that EUR/USD shorts will be squeezed in coming sessions.
EUR/USD bears will be hoping for a sustained break under the 2019 1.1027 low, which would expose 1.1000 option barriers .