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May 24 - 05:55 AM

EUR/USD - COMMENT-Two Levels May Define The Next Big EUR/USD Move

By Jeremy Boulton  —  May 24 - 04:25 AM

Two levels may define the next big EUR/USD move, and should the pair wake from a long slumber, a break could catch many traders unaware, resulting in a rather disorderly and rapid period of adjustment that leads to a big rise in volatility.

EUR/USD hasn't moved far since the start of last year, with most trading unfolding within 1.05-1.10 and volatility dropping substantially - and then remaining suppressed.

During this period, the 200-WMA has been of particular significance, helping to define the high twice when traders have been very bullish.

This year, the 100-WMA helped to shape the low during the only period when traders have bet against the euro since September 2022.
Having done so, the 100-WMA now represents a crucial marker on the downside.

Both the 200-WMA, currently 1.1126, and 100-WMA at 1.0639 are slowly converging and a break beyond one of these points is certain.

Betting on the euro's direction is running at a low ebb, and so represents very little restraint on any move.
The lack of concern about future movement reflected by low option vols may leave traders badly hedged for a breakout that must happen.

For more click on FXBUZ

Source:
Refinitiv IFR Research/Market Commentary

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