EUR/USD: Put demand rises despite Friday's bull hammer reversal

The EUR created a bull hammer candle on Friday, so the focus is on today's NY close.
Puts gained in value on Friday, despite the bullish candlestick pattern.

Omkar Godbole FXStreet Contributor

Currently, the EUR/USD is flat-lined around 1.1685, having defended the 20-day MA on Friday.

The common currency bulls may be feeling emboldened as the currency pair charted a bullish hammer candle on Friday along the 20-day moving average (MA) support.

However, techies would call a short-term bullish hammer reversal only if the spot closes today above 1.1687 (Friday's high). On the other hand, a break below 1.1613 (Friday's low) would shift risk in favor of a drop to 1.1508 (recent low).

EUR/USD puts gain value

Friday's bullish hammer candle failed to weaken demand for the put options (bearish bets). For instance, the one month 25 delta risk reversals fell to -0.90 on Friday, indicating a rising demand or implied volatility premium for the EUR puts.

Focus on US retail sales

A bullish close (above 1.1687) could remain elusive if US retail sales, due for release today at 12:30 GMT, tick higher as opposed to an expected slowdown to 0.6 percent month-on-month from the previous month's print of 0.8 percent. On the other hand, a weaker-than-expected figure could yield a stronger follow-through to Friday's bullish hammer.

EUR/USD Technical Levels

Resistance: 1.1722 (23.6% Fib R of April 17 high - June 21 low), 1.1771 (upper Bollinger Band: standard deviation of +2,-2 on 20-day moving average), 1.1852 (June 14 high).

Support: 1.1658 (20-day moving average), 1.1613 (previous day's low), 1.1508 (June 21 low).

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M	Bearish	Neutral	Shrinking
1H	Bearish	Overbought	Shrinking
4H	Bearish	Neutral	Low
1D	Strongly Bearish	Neutral	Shrinking
1W	Bearish	Neutral	High
Updated Jul 16, 04:00 GMT

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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