Shorts caught

Later today, we will get the commitment of traders report which outlines the speculative positions in the EUR. As most know, the shorts in the EUR may be off record low levels, but not by much. Last week they stood at -190K.

The start of trading in the EURUSD today may have suckered new shorts into the pair. Yesterday, the high stalled just before key resistance at the 1.1449 level (see daily chart below). ECB Draghi commented that the QE would continue to completion. The pair tumbled lower in London morning trading, but the weaker data in the US has reversed that trend. The shorts from the chart above, are likely also playing a key role.

With it being Friday and all the news being weak, it is really difficult to say "sell a peak". The sellers in this rally, may have had brief respites of joy, but they have been brief. The chart above gets to be a worry when things don't go the way the market expects. The close from yesterdays is at 1.1408. The price is now broken above that and the distance from it is starting to get wider. Moving below this level, might take some heat off, but I think there are enough damaged traders who might be happy to exit short positions on any pull back, and restart on Monday. Putting it another way, there may be intraday shorts against the 1.1449 level, but they should be happy with nicking 30 pips or so on a short.

On the topside the 1.1449 level was a high ceiling in February (see daily chart below). The 50% of the move down from the start of the move down from December comes in at 1.1515. The high from February comes in at 1.1530. Those represent the next targets for the pair.

The market can often take being short a bunch, even when the price is lower because the data is favorable. When the market price starts to move higher AND the data is not favorable, it creates fear, anxiety and visions of more losses dancing in peoples heads. The Fed wants to see the whites of the eyes in a 2Q recovery. They may continue to say "all is fine with the expectations for a 2Q (2H???) recovery, but they are not really seeing the whites of the eyes just yet. That hurts the shorts.