EUR/USD: Bears Struggle as Euro Demand Persists Amid Divergent Policies and Inflation Measures
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For short positions on EUR/USD:
Sellers capitulated, and today their hopes are dwindling. The divergent policies of the Fed and the ECB, as well as aggressive statements from European officials regarding further inflation fighting measures, maintain demand for the euro, which is used by the big players. The only thing the bears do is to protect the new resistance level at 1.0997.
I will go short on this mark after a rise and a false breakout. It may give a sell signal, pushing EUR/USD to a major support level at 1.0956, formed yesterday.
A decline below this level as well as an upward retest could trigger a downward movement to 1.0911. A more distant target will be the 1.0862 level where I recommend locking in profits. If EUR/USD rises during the European session and bears fail to protect 1.0997, the bullish trend will continue.
In this case, I would advise you to postpone short positions until a false breakout of the resistance level of 1.1029. You could sell EUR/USD at a bounce from 1.1029, keeping in mind a downward intraday correction of 30-35 pips.
COT report:
According to the COT report (Commitment of Traders) for June 13, there was a drop in long and short positions. However, this report was released even before the Federal Reserve's decision on the interest rate. The regulator decided to skip a rate hike in June this year, which significantly affected market sentiment. For this reason, one should not pay too much attention to the report. Demand for the euro remains high as the ECB remains committed to aggressive tightening. The euro is likely to maintain a bullish bias.
The best medium-term strategy is to go long on the decline. The COT report showed that long non-commercial positions decreased by 9,922 to 226,138, while short non-commercial positions fell by 3,323 to 74,316. At the end of the week, the total non-commercial net position dropped and amounted to 151 822 against 158 224. The weekly closing price increased and amounted to 1.0794 against 1.0702.
