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OPEC+ Agrees to Stick With Plan to Hike Production, Oil Prices Plunge

Bullish Euro Behavior to Persist Amid Bets for QE Program Adjustment

Bullish Euro Behavior to Persist Amid Bets for QE Program Adjustment

David Song, Strategist

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EUR/USD continues to approach the August 2015-high (1.1714), with the pair breaking to fresh monthly highs even as the European Central Bank (ECB) remains in no rush to remove the zero-interest rate policy (ZIRP).

The reaction to the ECB interest rate decision suggests there’s budding speculation for a ‘taper tantrum’ as the Governing Council will discuss the fate of the Public Sector Purchase Programme (PSPP) in the autumn. With the non-standard measure set to expire in December, President Mario Draghi and Co. may start to wind down its asset-purchases over the coming months as ‘incoming data, notably survey results, continue to point to solid, broad-based growth in the period ahead.’

Unless the ECB extends the deadline for the quantitative easing (QE) program, the euro-dollar exchange rate may exhibit a bullish behavior throughout the second-half of the year as the ECB gradually drops its dovish outlook for monetary policy.

EUR/USD Daily

EUR/USD Daily Chart

DailyFX 3Q Forecasts Are Now Available

Topside targets remain on the radar for EUR/USD as the pair clears the 2016-high (1.1616), with both price and the Relative Strength Index (RSI) preserving the bullish trends from earlier this year. A closing price above the 1.1670 (78.6% expansion) hurdle may spur a more meaningful run at the August 2015-high (1.1714) as the momentum indicator appears to be pushing back into overbought territory, with the next region of interest coming in around 1.1810 (61.8% retracement) to 1.1860 (161.8% expansion).

EUR/USD Sentiment

Track Retail Sentiment with the New Gauge Developed by DailyFX Based on Trader Positioning

Retail trader data shows 24.6% of traders are net-long EUR/USD with the ratio of traders short to long at 3.06 to 1. In fact, traders have remained net-short since April 18 when EUR/USD traded near 1.06683; price has moved 9.2% higher since then. The number of traders net-long is 15.0% lower than yesterday and 9.8% lower from last week, while the number of traders net-short is 11.1% higher than yesterday and 12.0% higher from last week.

For More Updates, Join DailyFX Currency Analyst David Song for LIVE Analysis!

--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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