- EUR/USD bulls pile in a short squeeze under way onGerman Chancellor Merkel and Interior Minister Seehofer reaching a compromise agreement.
- A break of 1.1680, 1.1720 comes as next pivot to target ahead of 1.1755 as the 23.6 per cent retracement fibo of the 1.2556 to 1.1508 2018 fall.
EUR/USD had been on the backfoot at the start of this week following Germany's interior minister threatening to resign despite most analysts expecting Merkel to survive the clash with the CSU. However, in the 11th hour, German media is reporting that an agreement on migration issues has been reached.
- Germany's Seehofer: We have a clear solution to stopping illegal immigration at the German-Austrian border
Seehofer's statements:
- "We have clear agreement.
- We have reached a sustainable solution.
- I will continue to serve as interior minister."
There has been plenty of short positions building up over the last couple of months, the potential for sustained short squeeze is strong. The dollar had taken up a safe haven bid with EUR political once again in turmoil and this might just have brought some near-term stability back, favouring the single unit into the US holidays and before the FOMC minutes and nonfarm payrolls at the end of the week when NY traders return. EUR/JPY will be key here as well, with USD/JPY bulls picking up the pace, stocks on the march in the final hour and the cross-testing the 50-D SMA.
EUR/USD levels
The broader range remains between 1.1500 and 1.1850 with 1.1720 as first pivot to target through 1.1680. Thereafter, 1.1755 comes as the 23.6 per cent retracement fibo of the 1.2556 to 1.1508 2018 fall guarding the 30-day upper Bollinger band currently at 1.1819. 1.1855 guards territory to 1.20/1.21. On the flipside, bears need to get below 1.1508-10 May-Jun lows, 1.15 barriers/ stops while the 1.1448/1186/0863 are key lower down as being the 2016-18 rising Fibo levels. (Also, the 200-week moving average is at 1.1435 while 1.1186/1.0814 comes as the 61.8% and 78.6% retracements).
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