EUR/USD lost the 1.20 level. While it hasn’t been able to regain it, the pair isn’t falling too fast either. What’s next? Here are four opinions.
Here is their view, courtesy of eFXnews:
EUR/USD: ‘Beware Of Bull Trap Risks’: Key Levels To Watch – BofAML
Bank of America Merrill Lynch Research discusses EUR/USD technical outlook and warns from bull trap risks.
“As with all breakouts, traps or whipsaws are a risk. Many eyes seem to be watching the EUR/USD and this 1.2092-1.21 area.
If the following price action occurs, it could be a bull trap.
If we soon see a weekly close above 1.21 followed by an adjacent weekly close below 1.20, then a technical decline would be signaled,” BofAML notes.
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EUR/USD: Moved Into ‘The Upside Down’; What’s The Trade? – Nordea
Nordea FX Strategy Research discusses EUR/USD outlook and notes that the pair has moved into the upside-down, or at least into the mirror image of 2017.
“One year ago, the EUR/USD was in a strong downtrend and it had just traded at 1.0340. Almost everybody was bearish the pair and looking for a breach of parity. Positioning a year ago was heavily negative according to IMM data. We all know what happened next – the best year for the EUR/USD since 2003.
Today, EUR/USD is in a nice uptrend, EUR/USD is trading at 1.20-21. Almost everybody is bullish the pair and is looking for a 1.25 or 1.30 reading later this year. Positioning is as positive today as it was negative a year ago. We note this since it’s *ahem* not unheard of that many of these “views of the year” are reversed as early as late January,” Nordea adds.
“We advise a tight stop-loss if trying to be short the pair. A breach in of 1.21 in EUR/USD would open up for a move into the 1.23-1.26 area, which might offer a much better entry opportunities for those of a more EUR-sceptical persuasion (these levels marks multi-year downtrends since 2008 on monthly charts),” Nordea advises.
EUR/USD: A Pause Seems Reasonable For Now – SocGen
Societe Generale Cross Asset Strategy Research discusses EUR/USD outlook and notes that the latest positioning data show another jump to a new multi-year high in long Euro positions.
“It’s hard to argue against the proposition that the market is long, and very bullish of the Euro. A pause seems reasonable after the failure to break clearly through EUR/USD 1.21.
That said, yield differentials are moving the euro’s way and the US data do nothing to support the idea of a more aggressive Fed or of a range-break in Treasuries,” SocGen argues.
EUR/USD: Scope For N-Term Consolidation; USD/CAD: Lower Into Next Week’s BoC – Barclays
Barclays Capital FX Strategy Research discusses EUR/USD outlook and thinks that the pair has overshot recently.
“We sees further near-term gains as unlikely despite its expectations for further medium-term EUR appreciation,” Barclays argues.
On USD/CAD, Barclays notes that the economic data have surprised in Canada, with the CAD playing catch-up
“The market is now 80% priced for a 25bp rate hike at the 17 January BoC rate decision. As such, we expect USDCAD to extend its decline into the event as expectation builds,” Barclays adds.
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