Leveraged funds have reduced EUR longs, reducing positions down to levels last seen at the end of March/early April, which served as a springboard for higher EUR. In the medium run, trendline support from the 1.1603 lows in November 2020 is restraining the EUR/current USD’s drop from 1.2349. As range hemming becomes obvious, 1.1695-1.1705 maintains critical support levels, according to Benjamin Wong, Strategist at DBS Bank.
“Over the previous three months, the trading community’s aim has been clear: leveraged funds have reduced their long positions. Positionally, the EUR is back to the end of March/early April, when the market hit a key low of 1.1704 and then rallied to a high of 1.2266.”
“Europe is catching up to the United States in terms of population percentages receiving at least one vaccine shot. Germany, Italy, and Spain are currently ahead of the United States in terms of population percentages receiving at least one vaccine shot. EUR would have to take notice of the positive aspects of Europe’s reopening as vaccination activity progresses.”
“As it approaches a trend support line drawn from 1.1603, the mid-November lows, the EUR’s current drop is slowing. After a 4.5 percent slide from the 1.2349 highs, the technical indicator is no longer overbought, and there is a slew of support staggered into 1.1705 that marks March lows, as well as 1.1695, the 38.2 percent Fibonacci retracement of March 2020’s 1.0636 lows-January highs “weighing in at 1.2349.”
“The EUR has been dragged lower from 1.2262 by an ostensibly bearish head-and-shoulders peak. However, the evident message is one of range consolidation. The Bollinger Band on the weekly chart suggests a range of 1.2258-1.1705, however the EUR’s negative momentum is slowing as ranges widen.”/n
