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24 Aug 2015
EUR/USD defying gravity near 1.14
FXStreet (Bali) - EUR/USD continues to defy gravity by exchanging hands near its multi-month high at the open of Asian market, presently oscillating between 1.1375/80, just 10/15 pips off last Friday's high of 1.1390.
Epic EUR short covering as new paradigm unfolds
A new paradigm of sorts has emerged in the market, with risk-off conditions leading to a major liquidation of EUR shorts. Since EUR has become the funding currency of choice, investors across the world have been forced to unwind riskier asset positions initially originated via cheaply borrowed Euros, hence the strength in the Euro on short covering effect. Fed's monetary policy outlook, with the start of the tightening cycle no longer a 'done deal' even during 2015, together wit other risk-off elements (China, Greece, North Korea, global growth concerns) have all contributed to the acceleration of EUR/USD shorts bailing out in earnest.
EUR/USD technicals
Valeria Bednarik, Chief Analyst at FXStreet, shared her tech view: "The daily chart shows that the EUR/USD price has advanced beyond its 200 DMA for the first time since May 2014, whilst the 20 SMA has turned sharply higher well below the current level, having provided a strong dynamic support since the beginning of this August, whilst the technical indicators head strongly higher, now entering overbought levels."
Valeria adds: "Shorter term, the 4 hours chart shows that the RSI indicator stands at 85, and maintaining its sharp bullish slope, whilst the Momentum indicator also stands at extreme overbought levels. Despite the EUR is bullish, buying at current levels seems quite risky, as the pair has added around 380 practically with no corrections in between."
Epic EUR short covering as new paradigm unfolds
A new paradigm of sorts has emerged in the market, with risk-off conditions leading to a major liquidation of EUR shorts. Since EUR has become the funding currency of choice, investors across the world have been forced to unwind riskier asset positions initially originated via cheaply borrowed Euros, hence the strength in the Euro on short covering effect. Fed's monetary policy outlook, with the start of the tightening cycle no longer a 'done deal' even during 2015, together wit other risk-off elements (China, Greece, North Korea, global growth concerns) have all contributed to the acceleration of EUR/USD shorts bailing out in earnest.
EUR/USD technicals
Valeria Bednarik, Chief Analyst at FXStreet, shared her tech view: "The daily chart shows that the EUR/USD price has advanced beyond its 200 DMA for the first time since May 2014, whilst the 20 SMA has turned sharply higher well below the current level, having provided a strong dynamic support since the beginning of this August, whilst the technical indicators head strongly higher, now entering overbought levels."
Valeria adds: "Shorter term, the 4 hours chart shows that the RSI indicator stands at 85, and maintaining its sharp bullish slope, whilst the Momentum indicator also stands at extreme overbought levels. Despite the EUR is bullish, buying at current levels seems quite risky, as the pair has added around 380 practically with no corrections in between."