The Euro extended its five-day slide as more speculative long bets bailed against the overall stronger US Dollar. The risk aversion theme once again supported the Greenback against most of its rivals, in the majors, risk and EM currencies. The abysmal US Payrolls report was offset by weaker Euro area Services PMI’s (Spain, Italy, France and Germany) as well as the Eurozone itself.
The week ahead sees the ECB rate policy meeting (early Thursday morning, Sydney). Today sees German Factory Orders and the Eurozone Sentix Investor Confidence report. Last week we highlighted the speculative market positioning saw a large increase in net Euro long bets to +EUR 61,290 contracts from -EUR 32,495. This accounted for the bulk of net speculative USD shorts. This is another reason why the Euro could not sustain its upticks.
EUR/USD has immediate support at 1.0770 (overnight low 1.07727) followed by 1.0750. A clean break of 1.0750 could see 1.0700 and 1.0650. Immediate resistance lies at 1.0850 followed by 1.0900. Look for a likely range today of 1.0750-1.0900 first up.
