EUR/USD risk reversals contradict bearish pinbar, still gunning for 1.20?

EUR/USD - bullish sentiment strengthens in the options market.
Bearish pin bar needs a negative follow-through.

Omkar Godbole FXStreet Contributor

Euro's drop from the previous day's high of 1.1975 to 1.1898 cannot be attributed to specific factor(s) but could be considered as a sign of bull market exhaustion. Kathy Lien from BK Asset Management writes, "the technical structure of the pair signals a deeper correction to 1.1850."

However, as per textbook rules, only a negative follow-through (bearish price action) today would add credence to the bearish pin bar candle and open doors for a deeper pullback.

But, the EUR/USD risk reversals gauge suggests the bearish pin bar could be a bear trap.

Risk reversals

The one-month 25 delta risk reversals gauge rose to 0.55 yesterday; the highest level since July 25. The uptick in the gauge indicates increasing demand for the EUR calls. Clearly, the options market sees yesterday's dip as a temporary one.

Still, a move above 1.20 is easier said than done as the memories of ECB jawboning the currency back in September could keep the bulls at bay.

EUR/USD Technical Levels

FXStreet Chief Analyst Valeria Bednarik writes, "technically and for the upcoming sessions, the pair retains the bullish stance despite the modest daily pullback, as in the 4 hours chart, technical indicators have managed to correct extreme overbought conditions, but remain well into positive territory, with the RSI around 62 indicating a limited downward strength. In the same chart, the 20 SMA maintains its bullish slope around 1.1870, reinforcing the view. The 1.1890 region is the immediate support, en route to 1.1860, while only below 1.1820 bulls will lose hope, handing the grip to bears.

Support levels: 1.1890 1.1860 1.1825

Resistance levels: 1.1960 1.2000 1.2045

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M	Bearish	Neutral	Shrinking
1H	Bearish	Oversold	Expanding
4H	Bearish	Neutral	Low
1D	Bearish	Overbought	High
1W	Bullish	Neutral	Low
Updated Nov 28, 03:00 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.

GBP/USD advances to three-month peak beyond 1.3600

GBP/USD extends its daily rally and trades at its highest level since mid-May above 1.3600. The US Treasury Department decision to double the sice of liquidity support buyback operations for longer-dated nominal coupon securitiez weighs heavily on the US Dollar and helps the pair push higher. Earlier in the day, the data from the UK showed that annual Consumer Price Index (CPI) inflation picked up to 2.9% in July, meeting estimates, while core CPI rose by 2.6% YoY in July versus 2.5% expected.

EUR/USD surges to 11-week high above 1.1650 after US Treasury announcement

EUR/USD gathers bullish momentum and trades at its highest level since early June above 1.1650 on Wednesday. The US Dollar stays under heavy bearish pressure after the US Treasury announced that it will increase the size of liquidity support buyback operations for longer-dated nominal coupon securities. Later in the day, investors will scrutinize FOMC Minutes for fresh clues on policy outlook.

Gold holds above $4,500, highest since June on falling US bond yields

Gold eases from its highest level since early June, though it trades above $4,500 during the Asian session on Thursday. The US Dollar draws some support from the US-Iran standoff and hawkish FOMC Minutes, capping the upside for the bullion. Meanwhile, the US Treasury Department stepped in to provide relief to bond markets, leading to a further decline in yields and limiting the downside for the non-yielding yellow metal.

HYPE soars 20% as Trump signals efforts to bring Hyperliquid to US market in White House meeting

Hyperliquid surged over 20% on Wednesday after President Donald Trump said the Commodity Futures Trading Commission is working to bring the decentralized perpetual futures platform into the US.

$20 billion offered, $2 billion taken: Why Treasury doubled its buyback cap

The US Treasury moved off its own calendar on Wednesday, and that is the part worth sitting with. At 12:32 GMT, the department said it would at least double the size of liquidity support buyback operations in the 10-year to 20-year and 20-year to 30-year sectors, lifting the maximum from $2 billion per operation to at least $4 billion, effective September 9 and running to November 4.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.