EUR/USD yesterday moved more than 450 pips up – commentators haled this move one of the longest since last 6 years. However life teaches us, that there is no action without further reaction. Very often such impulses are just “extinguished” by market. Is that going to happen this time?
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1.0950 clearly focused bears, which after the labor market data publication started to buy the dollar again. Currently, the market is clearly below 1.0900 and is looking to calm the violent reaction on reading. We expect that the bears want to push the price lower, towards 1.0800/1.0790. Is it possible to move once again to 1.0666/50? That’s a tougher question. It is worth to remember, how the down positioning was stretched recently. Yesterday’s rally put a lot of bears in the face of a large loss. If they decide to cancel their short positions, then the demand strength will be to big even though the fundamental factors are theoretically supporting the dollar.