- EUR/USD faces rejection at 1.1930 despite risk-on in Asian equities.
- Record bullish positioning makes the EUR vulnerable to sudden pullbacks.
- An above-forecast Germany preliminary CPI number is needed to restore the recent uptrend.
EUR/USD is now trading near 1.1910, having clocked a high of 1.1930 during the Asian trading hours.
The pair has pulled back from 1.1930 despite the risk-on action in the Asian stock markets. According to Reuters, the MSCI’s broadest index of Asia-Pacific shares outside Japan is trading at the highest since March 2018. Japanese stocks have also gained 1%.
The risk sentiment seems to have been buoyed by the better-than-expected China Manufacturing and Non-Manufacturing PMI numbers for August and the Federal Reserve’s recent decision to adopt a more relaxed approach to controlling inflation. Even so, the safe-haven dollar is showing some resilience.
One possible reason for the lack of convincing move higher in EUR/USD could be the extreme bullish positioning in the market. Speculators increased their bullish bets on the common currency by 14,809 contracts to a new all-time high of 211,752 contracts in the week ended Aug. 25, the data released on Friday showed.
The record bullish positioning makes the currency pair vulnerable to a sudden pullback. However, a more substantial buying pressure may emerge, lifting the currency pair to recent highs above 1.1960 if the preliminary German consumer price index for August, due at 12:00 GMT on Monday, beats estimates.
Technical levels
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