The Euro has risen considerably over the past weeks, roughly 9.5% off its March lows against the US Dollar. It is possible that the rise of the Euro could reflect of an increase in risk sentiment. This has been mirrored in risk commodities like Oil and Copper, as well as commodity Dollars like the Canadian and Australian Dollars. Euro futures short positions have never been this extreme for over 20 years, however these short positions are now declining in the futures market. If this trend continues then we could see the Euro continue to appreciate on profit taking. The real key will be if we see long positions increasing from their extremely low levels. To add to the case of a sentiment change is the recent rout in the global bond markets, which appears to be back in force as bond yields continue to increase as investors abandon safety. It is likely that in the long-term a rise in rates will affect the Euro… if the FED ever actually raises rates.
Today the Euro is trading at $1.1159 after finding support at 55 Day Exponential Moving Average.
EURUSD Daily Chart