Those long EUR/USD should be aware that the euro seems to have a structural bias to fall against the U.S. dollar in May.
A seasonality study of EUR/USD's performance for each May since 2000 shows it has fallen in 13 of the past 21 years, or 62% of the time.
While seasonality should not be considered in isolation, it's a useful tool combined with other factors.
The current structure of the market and technical factors point to a near-term EUR/USD fall.
Commodity Futures Trading Commission data show that for the week ending April 27, the value of the net long euro position held by speculators remained steady at 10.1 billion euros from the previous week.
EUR/USD EBS data since April 27 shows traders may have exited some of those longs, but outstanding longs remain vulnerable to possible near-term selling.
EUR/USD failed above the 1.2103 Fibonacci level, a 61.8% retrace of the 1.2349 to 1.1704 2021 drop, leaving a "bull trap".
A bull trap is set when a market breaks above a tech level but subsequently reverses.
There is a major risk that the market drops into the daily cloud that now spans the 1.1900-1.1974 region.
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