
EUR/USD Short Squeeze Underway as Yields Drag US Dollar Lower
EUR/USD short squeeze gathers pace as US Treasury yields retreat, despite strong GDP and sticky inflation. Fed and ECB policy expectations remain in focus.
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EUR/USD short squeeze gathers pace as US Treasury yields retreat, despite strong GDP and sticky inflation. Fed and ECB policy expectations remain in focus.

USD/JPY stalls at resistance as EUR/JPY forms a falling wedge. Fed, ECB and BOJ rate expectations could determine the yen's next move.

Record euro shorts leave EUR/USD vulnerable to a short squeeze as traders assess ECB inflation risks, December rate hike expectations and Fed policy.

A new trading week is underway and the euro continues to show signs of weakness in the short term. This can be seen in the recent performance of EUR/USD, which has fallen nearly 0.5% over the last three trading sessions, reflecting a relatively consistent loss of momentum in the European currency.

The euro continues to face a challenging environment in the short term. The currency has struggled to regain ground against a U.S. dollar that remains firmly supported, a dynamic reflected in EUR/USD, which has now recorded three consecutive losing sessions and a decline of roughly 0.6%.

The week continues to present challenges for the euro's short-term strength. This is reflected in the recent performance of EUR/USD, which has declined by nearly 0.6% over the last three trading sessions

Today's session has been particularly relevant for the euro's performance in the short term. After the EUR/USD registered a decline of nearly 0.3% during the session, the European currency has managed to recover a large part of its losses.

EUR/USD is building on a rebound from trend support, with major event risk poised to test the strength of the recovery.

The ECB’s decision on Thursday comes between two important US inflation releases, leaving EUR/USD forecast exposed to developments on both sides of the Atlantic, as well as the situation in the Strait of Hormuz.

EUR/USD could extend its pullback as traders assess the ECB’s rate hike, inflation outlook and prospects for further tightening.

The higher oil goes, the worse it may get for the euro, which, to be fair, has performed well during the more recent rises in oil prices compared to earlier this year. Still, the risks to the near EUR/USD forecast remains tilted lower as the pair tests the 200-day average ahead of a pivotal week.

EUR/USD remains trapped in a tight range, but Thursday’s ECB decision and US inflation data could provide the catalyst needed to break it.

It was not an easy week for the euro. Now, EUR/USD has accumulated a decline of more than 0.4% over the last 2 trading sessions, reflecting significant short-term weakness in the European currency.
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