Talking Points
- EURUSD shorts at risk ahead of ECB
- Updated targets & invalidation
EURUSD 30min
Chart prepared by Michael Boutros
Technical Outlook: Euro is has been trading between the 100 & 200 day moving averages since the start of the week with the decline continuing to respect a broader descending median-line formation off the April & May highs. The short-side is vulnerable heading into tomorrow’s ECB interest rate decision and although we cannot rule out another drop into key support, we’re generally looking for a low around these parts for the euro. Keep in mind we still have U.S. Non-Farm Payrolls on tap for Friday.
From a trading standpoint, heading into the rate decision I would be looking for either a dip into key support to fade the move or a breach & re-test of resistance as support to offer long-entries. A break below key support at 1.1045/65 invalidates the reversal risk with such a scenario targeting the 61.8% retracement of the December advance at 1.0935.
Interim resistance stands at 1.1179/87 with a breach higher targeting objectives at 1.1219, 1.1242 and more significant resistance at 1.1286/95. While it’s too soon to tell if we can rely on this ascending pitchfork formation, the median-line does highlight near-term resistance at the aforementioned level. We’ll be continuing to track this setup and more throughout week on SB Trade Desk.
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- A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net short EURUSD- the ratio stands at -1.06 (49% of traders are long)-weakbullishreading
- Yesterday the ratio was +1.06 (51% of open positions were long); Long positions are 5.9% lower than yesterday and 12.1% below levels seen last week
- Open interest is 0.5% lower than yesterday and 2.3% below its monthly average
- The recent reduction in long positioning & flip to net short suggests the short-bias is vulnerable heading into the release.
Relevant Data Releases This Week
Other Setups in Play:
- USD/CAD Long Bias Vulnerable Sub-1.3120
- AUD/USD Rebound to Face Australian GDP- Resistance at the Yearly Open
- USD/JPY Coiling Ahead of U.S. GDP- Breakout Levels to Watch
- EURGBP Breakdown Eyes Critical Support at 7520
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---Written by Michael Boutros, Currency Strategist with DailyFX
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