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Oct 20 - 11:55 AM

EUR/USD - COMMENT-EUR/USD Upside Risks Appear To Be Growing

By Christopher Romano  —  Oct 20 - 09:42 AM

EUR/USD bounced on Wednesday after initially extending its fall from the previous session's high, with options and technicals signaling upside risks.

EUR/USD risk reversals indicate the vol premiums for puts over calls is eroding and are either neutral or only slightly in favor of puts.

The current risk reversal trend suggests premiums for calls might soon exceed those for puts.
The price action suggest EUR/USD options investors are less wary of a downside move.

Technicals continue to suggest EUR/USD faces upside risks.
The drop from Tuesday's high stalled at the 21-day moving average in Europe.
After hitting a 1.1617 low on EBS buying took hold and the pair turned positive in early New York trading.
Daily RSI is rising again and a daily doji candle formed.

Monthly tech signals reinforce the bullish outlook.
Monthly RSI is rising and not near overbought.
A monthly bull hammer candle has formed after EUR/USD rallied away from the 50% Fib of the 1.0636-1.2349 rally.

The 38.2% Fib of the 1.1909-1.1522 decline and Sept.
29 daily high remain impediments for EUR/USD longs but they look vulnerable still.
Should they break longs are set to test 1.1750/60 resistance and the daily cloud which sits near 1.1800.

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Refinitiv IFR Research/Market Commentary


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