With a key risk event ahead for EUR/USD in the form of the ECB meeting this coming Thursday, the pair is last at $1.3062, off recent session highs at $1.3069, still below Tuesday's weekly highs at $1.3075. The pair is up a small +0.30% for the week so far, taking down volatility to 1-month lows as measured by average daily range for last 14 trading days, at 108 pips per day. This is near its longer term average, and down from recent 120 pips, fresh 6-month highs.
The euro showed a major turnover in COT positions as of latest release, changing net short positions from commercials coming all the way from an average of $1.34, with speculators in the other wrong side of the trade, to now holding a tiny net long position, ahead of the 200 day SMA around the key level $1.2850. This in some way represents new buying interest in euro from hedgers, and/or USD selling interest, as USD index trades around the 82.00 key level, near 5-month highs.
Risk-on mode back on track also helped euro buyers, as the Dow Jones Industrials index printed all time record highs above the 14,250 points mark, easing pressure from U.S. bond buying and thus lifting U.S. 10 year bond yields to around 1.9%, off recent lows at 1.84%, and also lowering demand for U$1.36 mark. Euro demand from EUR/AUD near 6-week lows below the 1.27 mark could also weigh on the EUR/USD pair as well.
For CMT and FXstreet.com Independent Analyst Fan Yang, "A break below $1.30 clears an intra-week trendline and revives a bearish outlook toward the $1.2875 (50% retracement) level," the analyst says, adding: "Currently, a push above $1.31 will be needed to neutralize the bearish outlook, but a push above $1.33 to clear a falling trendline will be needed to revive the bullish outlook," he concludes.
At the same time,Valeria Bednarik, Chief Analyst at Fxstreet.com, notes: "The hourly chart shows a quite limited bullish tone, as the price stands above 20 SMA while indicators lay above their midlines, showing not much strength at the time being." Valeria suggests "the 1.30/31 range will probably extend ahead of ECB on Thursday, with the downside seen limited by market positive mood."