EUR/USD — The Most Bullish It’s Been For Months

The USD weakness playing through after Powell’s Put is evident in the valuation of the Euro. While I’ve argued that I simply can’t envision the multi-month range to be decisively broken, price action and volume is king as they reflect the market’s intentions. The close above the first layer of resistance at 1.1443 is a major warning sign that yet another attack towards 1.15 is on the cards. Notice, the retest of 1.15 would be just 4 days after it was last tested, which suggests sellers’ conviction is definitely waning. The pick up in the risk environment underpins the USD liquidation short-term, as does the latest fundamental developments by the Fed (blinking), which was well telegraphed by the widening of the German vs US bond yield spread. However, the economic data in the EZ is far from giving us much enthusiasm as the repercussion for a dovish tilt in the ECB monetary stance cannot be underestimated. The bond yield curve in Germany should be a red flag. Overall, it looks like an opportunity to be a buyer on weakness remains the scenario most attractive, especially if one considers that the downside is now supported by the backside of the 1.1443 + range POC at 1.14.