The euro continues to hold its ground in todays trading session bouncing back from a three-week low of $1.2104 which it reached on Friday as traders placed short bets against the currency on the back of an expected strong NFP report which didn’t eventuate.
It now looks poised to build on those gains with the release of GDP figures from the Eurozone which is expected to show a slight recovery in the European economy after the devastating effects of the coronavirus which has seen the local block tumble over the last 18 months.
Also helping the Euro is the negative sentiment towards the US dollar, and in the final week of May, it was reported that market had placed their bets against the greenback and increased their dovish exposure in the US Dollar with shorts trades rising to a 3-month high, to a total of $17.8bln.
This bearish drive will be put to the test on Thursday with the release of CPI figures from the US which should give us a clear picture on the state of the economy and if a rebound is on the way after the effects of Covid 19.
The resistance line from yesterday’s trading session has now once again turned into a support line and holders of long positions in the Euro will want that level to hold throughout the trading session today, which will depend a lot on today’s release of GDP figures.
If it can hold this level, we should see some further strength over the next few days and possibly a run to the $1.2211 mark reached last Thursday where there may be some resistance as the market awaits CPI figures from America.