Source: ForexYard
As discussed in today’s FOREXYARD Daily Analysis, overstretched market positioning has allowed for a bit of a EUR short squeeze on the back of a solid Spanish bond auction and strong US housing numbers.
The most recent CFTC Commitment of Traders report shows speculators in the futures market have built their largest EUR short position since May 2010. As of last Tuesday speculators were holding -116k contracts short, up from -95k. The one sided positioning highlights the market’s pessimism against the EUR but also brings the possibility of a short squeeze.
Today’s short squeeze has helped the EUR/USD rise as high as 1.3120. There is short term resistance in this area as the 200-hour moving comes in at 1.3135. Also contributing to the resistance is the October 4th low of 1.3140, and the 38% at 1.3130, the Fibonacci retracement from the move stemming from December 9th to December 14th (1.3433-1.2945).
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