The recent upsurge in the EUR/USD, which comes on the back of USD weakness as per current data, is reflected in the latest version of the CFTC Positioning Report.
According to the report, speculators raised their gross long positions on the single currency for a third straight week, allowing net longs to hit 7-week highs. The recovery in German bond yields and vast improvements in the pace of vaccinations are factors aiding the bullish stance of these speculators.
At the same time, the USD saw net longs decline to just above 2K contracts, marking new lows for 2021. A combination of the weak jobs data and the Fed’s dovish stance on tapering the QE program and interest rates is souring bullish sentiment on the greenback.
This scenario has allowed the EUR/USD to pick up steam with a rebound on 6 May, following a corrective decline from the bullish break of the falling wedge on the daily chart.
Technical Outlook for EUR/USD
Today’s doji candle, formed at the 1.21792 resistance, sets the stage for a potential correction if this resistance holds firm. Immediate downside targets are found at 1.21487, with 1.20890 and 1.20549 serving as additional downside targets.
On the other hand, a break above the 1.21792 resistance allows the bulls to push prices towards 1.22416. Additional upside barriers are found at 1.22768 and 1.23490, by which time the price would be at the 6 January 2021 high. Uncapping of the barrier at 1,23490 allows the EUR/USD to attain new highs for the year.