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Sep 09 - 08:55 AM

EUR/USD - COMMENT-EUR/USD Bears May Have Long Wait For Deeper Declines

By Jeremy Boulton  —  Sep 09 - 06:50 AM

This year EUR/USD has gradually fallen while traders have pared bets on it rising, but with net betting on EUR/USD now close to balance it will take a big change in thinking and a bigger move into short positions to fuel a deeper decline.

The decision to take a profit is relatively easy compared with a decision to gamble and traders who are more often guided by technicals should be reluctant to bet on a drop because the bull trend that started last year as a result of the COVID-19 pandemic is alive and well. nL1N2QB0LN

The doubling in the number of short positions since June is either based off short-term technicals or have no technical basis and instead are bets on Federal Reserve tapering.

Followng Friday's U.S. non-farm payrolls report for August, EUR/USD reached 1.1909, retracing half the drop that inspired the doubling of shorts, the bulk of which have been established below 1.19.
There's greater risk of a short squeeze than a change of trend.

Related dollar comment nL1N2QB0GF

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Source:
Refinitiv IFR Research/Market Commentary

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