The slide in EUR/USD on Monday looks temporary as the steady build-up of short positions traded on the EBS since June 27 look vulnerable to a big near-term squeeze.
EUR/USD saw the joint second biggest one-day rise of 2018 on Friday, when the market closed up 122 pips, hinting at a shift in the near-term bias back to the upside.
There's growing scope for gains above the 1.1755 Fibo -- 23.6 percent retracement of the 1.2556 to 1.1508 2018 fall -- which may pave the way to the 30-day upper Bollinger band currently at 1.1819.
EUR/USD has been under pressure on the back of rising concerns over an escalation in the trade dispute between the U.S. and its main trading partners.
The euro was also hurt today after German Chancellor Angela Merkel was dealt a fresh blow when her interior minister offered to quit in an escalating row over immigration policy nL4N1TY3DU.
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