Matt Simpson, CFTe, MSTA
CityIndex
The Greenback has seen significant inflows by speculative traders who have pushed the USD up to 12-month highs whilst Euro bears continue to increase their Net Short exposure.
With several key FOMC members all talking this week it could be the ideal time to find out if the Hawkes are coming out of hibernation and drop clues to the timing of interest rate rises. Technically I suspect the USD saw a 6.5yr cycle low back in April and for the bullish theme to continue for the remainder of the year, as traders enjoy extra volatility and directional moves.
EURUSD continues to unravel at break-neck speed en route to 1.30, although we are likely to find interim support at 1.31 before another leg lower. ECB announce their bid rate with traders wondering if ECB President Draghi will pull the trigger for QE or decrease negative bank rates even further.
Any rally towards 1.315 resistance is likely to attract bearish trend traders for their 1.31 target. We are currently mid-way between this range and a direct move down is not out of the questions if early Asia trading is anything to go by.
We may get a sizeable bounce around 1.31 but only a break above 1.3322 swing high would bring into question the bearish trend. A break above 1.322 could see bulls targting 1.333 but I do not see this as a likely scenario - instead seeking bearish setups to target 1.31 and 1.30 over the coming week/s.
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