- Summary:
- The EUR/USD continues to face serious downside risks ahead of the meeting of the European Central Bank (ECB) later in the week.
Some aspects of the latest CFTC Positioning Report for the week ended March 2, 2021 are presented below. Emphasis is on the Euro, which is facing tough times at the moment. The CFTC report indicates that the speculative net longs on the Euro continue to dwindle. Speculators added to their net shorts on the Euro for the 5th straight week, following the poor pace of the coronavirus vaccine rollout in Europe, and fears that the recovery of the EU economy would lag those of its peers.
Within the last two weeks, at least two members of the board of the European Central Bank (ECB) had made dovish calls. Fabio Panetta, one of the two ECB board members, said that any temptation to conclude that progress in vaccine technology means there is less need for monetary policy support “must be resisted”. Panetta even went ahead to call 2021 “a pandemic year.”
The Euro is expected to continue to face downside risks heading into the ECB meeting.
Technical Levels to Watch
The EUR/USD looks set to close lower for the 4th day in a row, as the three black crows formation on the daily chart plays out. The active daily candle has violated the 1.18927 support, down by 0.39%. A close at this level or lower fulfills the price filter requirement for a breakdown confirmation, opening the door towards 1.18008. Further decline on the pair targets 1.17313.
On the flip side, a retracement rally that gets above 1.19472 targets 1.19999, with 1.20549 forming an additional upside target. This rally may simply be an opportunity for bears to sell cheaper. The ECB meeting on Thursday could decide further direction on this pair.
EUR/USD Daily Chart
