EURUSD Analysis Update
Short-term speculators see the prevailing market sentiment as one favouring risk based asset classes. The greenback has dropped broadly yesterday, putting an end to the dollar upside that had seen it hit a near one year high versus the Japanese yen and a monthly high v the euro. Friday’s price action came as the trend towards positive U.S. data hit a blip. US inflation data opens up the possibility that the Fed may not be able to sustain its highly-accommodative monetary policy in the near to medium term.
The USDX fell 0.4% and the dollar dropped 0.7 per cent v its euro counterpart to close at $1.3173 as can be seen on the EURUSD H4 chart below.
Large speculators have decreased bearish bets on the EUR FX CME according to the latest CFTC data. Futures traders from the CME were net short 99,336 contracts for the 13th March reporting period versus 116,473 the previous week.
EURUSD Technical Analysis
- Price has seen a continuation of the trend line breakout we highlighted on Thursday. There was a breakout retest continuation scenario during trading on Friday as spot hit the descending trend line briefly before heading higher.
- Price is now trading 173 pips above the 1.3000 round number after coming within 10 pips of hitting the psychological level earlier this week.
- The cluster of 365 and 200 period moving averages combined with a prior swing high around 1.3185 has capped the latest bullish wave for EURUSD.
- Yesterday covered 138 pips which is 114% of the ADR over 60 days. The weekly range was 187 pips which is only 55% of the AWR over 26 weeks.