EURGBP
The latest consignment of the Commitment of Traders report, otherwise known as the CFTC Positioning Report, indicates that speculators have reduced their net long positions on the Euro to levels that were last seen in late July. This is in tandem with the rising coronavirus cases across Europe and the dovish position assumed by the European Central Bank at its last meeting. The drop in net Euro longs is pressurizing the EURCHF, which has seen some recent downside as risk aversion took hold of the markets last week.
Reuters reported German Chancellor Angela Merkel as saying on Monday that the second wave of the coronavirus epidemic could be broken if the lockdowns remained in place for a month. Merkel also indicated that the number of ICU hospitalizations had doubled in the last ten days, reiterating that the government would not allow the rapid spread of the coronavirus to overwhelm health authorities.
Despite the rise in the EURCHF today, the pair remains under pressure as flight to the safety of the Swiss Franc remains very much in vogue.
Today’s bullish action came off the back of a bounce on the triple support formed by the channel’s lower boundary, the 200-day moving average line and the 1.06647 support line (previous lows of 29 May and 23 June). This bounce has violated the 1.06961 resistance but needs explicit confirmation of the breakout. If this is provided by a successive candle closing above 1.06961, then we may see further advance towards the channel’s upper edge, or the 1.07371 support level, whichever comes first.
Rejection at 1.06961 provides a chance for a retest of 1.06647, with 1.06152 and 1.06008 attaining viability as targets if the channel gives way to selling action.
