Near-term Setups in EURUSD & EURNZD
Earlier this week we highlighted that the rally in EURUSD was testing a ‘decision point’ at the 1.07-handle with a decisive breach through this region taking out targets into the 61.8% retracement at 1.0777. The rally is vulnerable here with the immediate focus back on the 1.07-handle - looking for a reaction there. A break lower would shift the focus back towards the monthly open with our bullish invalidation level now raised to the 100-day moving average / slope confluence at ~1.0630. Topside targets remain unchanged.
- A summary of IG Client Sentiment shows traders are net-short EURUSD- the ratio stands at -1.36 (42.4% of traders are long)- bullish reading
- The percentage of traders net-long is now its lowest since Mar 28 when EURUSD traded near 1.0814
- Long positions are 14.2% lower than yesterday and 38.3% lower from last week
- Short positions are 1.2% lower than yesterday but 35.6% higher from last week
- Broader sentiment continues to point higher with the recent build in short-positioning further highlighting the long-bias. From a trading standpoint, I’d be looking to fade weakness into structural support with a breach above 1.0819 needed to open up the next BIG leg higher in the pair.
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EURNZD: We got the initial drop & pop we were looking for but the rally fizzled out just ahead of the 1.54-target. Similar expectations here as EURUSD with our levels unchanged. Look for the pullback to get long with our near-term bullish invalidation level now raised to the low-day close at 1.5180. Latest EURNZD update.
---Written by Michael Boutros, Currency Strategist with DailyFX
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