EUR/USD Rallies Ahead of EU Summit, Eyes on 2020 High
EURUSD Price Analysis & News
- Euro Looking for 2020 Highs Ahead of EU Summit
- EUR/USD Posted a Long Term Bottom in Q1
- Netherlands Unwilling to go Dutch
- Crowded Short USD Trade has Tended to Lead to USD Appreciation
Euro Looking for 2020 Highs Ahead of EU Summit
The Euro has continued to go on from strength to strength with the break above the 1.14 handle, maintaining its bullish trajectory as such, as we head towards the EU summit, eyes are for a test of the 1.15 handle. While the ECB rate decision is due tomorrow, given that major policy announcements are unlikely to take place we place our attention to the EU summit.
EUR/USD Posted a Long Term Bottom in Q1
Netherlands Unwilling to go Dutch
As it stands, the Netherlands is unwilling to go ‘dutch’ with the current recovery fund as Dutch PM Mark Rutte reiterates his critical stance on the proposal and stating that he is not hopeful on a deal this week. However, while this has the potential to curb the recent enthusiasm in the Euro, this is not entirely a surprise to market participants given that Merkel has already noted that a long road awaits for the EU to reach an agreement on the proposal. As such, the critical stance from the frugal four (Austria, Sweden, Denmark, and the Netherlands) has been largely shrugged off thus far.
Fresh Euro Longs are Not Without Risks
Since the first announcement of the German-Franco recovery fund proposal the Euro has seen an impressive recovery. However, given the size of recent gains, fresh Euro longs are not without risks as questions are raised over a risk-reward basis for another sizeable appreciation in the currency in the short run, particularly as expectations of an agreement are relatively low. Alongside this, US Dollar short positioning adjusted for open interest is at a near 7yr low, which is somewhat concerning for Euro bulls on a contrarian basis. That said, a surprise agreement this week and the Euro can be off to the races towards 1.16.
Crowded Short USD Trade has Tended to Lead to USD Appreciation
EUR/USD Price Chart: Daily Time Frame
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