Overall short-term market positioning would seem to be at very neutral levels which again should suggest moderate volatility,” says Sean Lee, founder at FXWW, “although EUR shorts are again the exception,” the analyst adds, referring to increasing short interest from professional traders.
“The biggest position amongst professional players at the moment is short EUR,” Sean says. “EUR/USD is in a short-term downtrend but seems to have found a temporary base at 1.2765,” Mr Lee expands, adding: “Given recent range-trading history, confidence will not be high amongst the bears that a trend is about to develop and the possibility of a double-bottom on the short-term charts will also be unsettling them."
Sean finds “there is room for further retracements towards more solid resistance 1.2880/1.2920,” the analyst concludes. Meanwhile, Valeria Bednarik, Chief Analyst at FXstreet.com, also notes that "price needs to extend beyond the 1.2880 level to be able to extend its recovery today."
In a more complete analysis, immediate resistance to the upside for EUR/USD comes at recent session highs/200 day EMA at 1.2873, followed by Oct 26/29/30 lows at 1.2885, and Oct 24 lows at 1.2920. To the downside, closest support lies at previous weekly high Monday 1.2842, followed by yesterday's NY session high at 1.2826, and recent session lows at 1.2784.
One day ahead of the ECB rate call, the next London session will deliver Spanish industrial production at 08:00 GMT, EU retail sales and Autumn economic forecasts at 10:00 GMT, and Germany industrial production 1 hour later. Also German PM Merkel will address European Parliament in Brussels at 15:15 GMT, while Greek Parliament will vote on new austerity measures plan during the day. In the sovereign EZ debt auctions front Germany will try to sell up to € 4B in short term bills at 07:00 GMT, with US 10 year yields having a beat following Obama's win, and German 10y at 1.46% yield near 2-month lows.
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