Rates & Bonds 2 MIN READ

Traders have good cause to think EUR/USD will rise again

August 23, 2023By Reuters

With charts painting EUR/USD in a bullish light and those betting on a rise making money this year, traders have good cause to think the pair will rise again.

What really matters is that the big number of traders betting on a rise have already seen EUR/USD meet their expectations. Many of those gambling on a rally have made money and traders making money usually hold onto, or add to, bets – or reestablish their bets after they have taken profit.

This year, traders have consistently bet on a rally, holding between USD 18-25 billion of wagers on that eventuality.

Though the pair struggled to beat February’s 1.1034 high, it did do so in July, reaching 1.1276, and while it has taken a long time for this to happen, dips during this year were modest and little threat to those long.

Pullbacks have usually followed periods where the pair is overbought, with one of these moves currently ongoing. After reaching a key bull target at 1.1270 in July, the following drop, which has reached 1.0833, represents a step up from the range which dominated for the first half of this year.

This drop may well lay foundations for bigger gains for which the next target is 1.1447. A close over the 100-MMA at 1.1250 and the 61.8% retracement of the 2021-22 slide at 1.1271 would invigorate the uptrend.

The twist of the monthly Ichimoku cloud near 1.16 in January next year has the potential to attract.

(Jeremy Boulton is a Reuters market analyst. The views expressed are his own)

This article originally appeared on reuters.com

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