ING FX Strategy Research notes that the ‘big question’ for EUR/USD this week is whether we’ll get a topside breakout of a trading range that has held since the onset of the ECB’s QE program in Jan 2015.
“Potential catalysts for a breach of the 1.1714 resistance level include constructive EZ data , a more dovish-than-expected Fed, a 2Q US GDP miss or an increase in US political uncertainty.
While there are good reasons to see EUR/$ reaching new multi-year highs, we may need to see some combination of all of these factors to get a close above 1.1780/90 this week.
The latest CFTC data – collated prior to the ECB meeting – shows that net long EUR positions are just shy of their 5-year high; given the rapid positioning adjustment, the risks are that we get a short-term consolidation in the EUR/USD,"ING argues.
Source: ING Global Markets Research
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