Listen to the latest market mood for the EURUSD pair.

Strong EUR, Weak USD

The COT report shows that Euro net long positioning is reaching high levels last seen in May 2018. In Europe, the COVID-19 case loads are contained and well managed and activity gauges are picking up.

By contrast in the US, the number of COVID-19 cases is rising and 25% of all global cases are now from the US. The response to containing the virus has been mixed and this could open up a divergence in the outlook for Europe and the US. The US Centre for Disease Control and Prevention said on Monday that the US, ‘has way too much virus’ to control the pandemic.

Therefore, expect EURUSD buyers on pullbacks medium term.

Swing trade outlook – We expect this trade to play out over the next 4 weeks. However, the trade will remain valid for as long as its underlying factors remain valid.

Trade Risks

  • Any indication that US cases are falling sharply will invalidate this outlook.
  • If we see a swift rise in European COVID-19 cases that will also invalidate this outlook
  • Any strong risk-off tones that result in USD buying will invalidate this outlook.