Mizuho argues that there is a risk for EUR/USD long positions to be unwound should the pair hit the 1.20 level
The high today for the pair hit 1.1997 and there is just a general expectation that we will see the 1.2000 level hit at some point in trading today.
Price action over the past few hours is hovering just under the figure level though, so that just adds to nerves surrounding the whole situation currently.
Mizuho argues that speculators have been adding to net euro long positions and “it is hard to see them doing nothing when positioning is so one-sided”. Adding that the pullback could be magnified given such skewed positioning.
Just be mindful that there is also talk of barriers layered between 1.20 and 1.22 and that may also help to limit any further upside potential in the pair for now; or at least it may prompt buyers to go with profit-taking in the sessions ahead.
That said, the pair remains underpinned by broader dollar weakness in general and the technical picture for the greenback remains rather bleak at the moment.
The Bloomberg dollar index highlights the pain being felt by the dollar upon a break of the 14 August low in trading since last Friday: