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GBPUSD: Sterling has pulled back from slope resistance and is responding to initial support at 1.2828/54. Looking for a reaction here heading into the close of the week with our levels / outlook unchanged- If we break, we’ll be looking for exhaustion / long entries on a move into structural support with a breach above the weekly open at 1.2984 needed to put the bulls back in control.
EURUSD: The pair is struggling after breaking below support at 1.0872. Heading into the close of the week we could get one more thrust lower but I’m generally looking for a low in in the pair around 1.0820/30 if our interpretation is correct.
- A summary of IG Client Sentiment shows traders are net-short EURUSD- the ratio stands at -1.65 (37.7% of traders are long)- bullish reading
- Retail traders have been net-short since April 18- the pair is up 2.5% since then
- Long positions are 10.6% lower than yesterday but 28.7% above levels seen last week
- Short positions are 0.2% lower than yesterday and 6.5% lower from last week
- While broader sentiment continues to point higher, the recent narrowing in the ration does leave the immediate topside bias vulnerable heading into tomorrow’s U.S. event risk. From a trading standpoint, I’ll favor fading weakness into structural support near confluence support into 1.0820.
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Yesterday we noted the risk for continued weakness in USDMXN with the decline now taking out the weekly open & weekly opening-range lows. The focus remains weighted lower sub-19.1230 heading into the close of the week with near-term support seen at 18.7837 backed by 18.6631.
---Written by Michael Boutros, Currency Strategist with DailyFX