BUZZ-COMMENT-EUR/USD longs are closer to throwing in the towel

Credit: REUTERS/DADO RUVIC

Sept 21 (Reuters) - EUR/USD slumped 0.7% on Monday as investors opted for safe havens in the face of growing pandemic , political and financial uncertainties , compounding risk factors threatening to send the euro falling out of the range it has held since late-July.

The death of Justice Ruth Bader Ginsburg added another layer of uncertainty to an already heated U.S. election season , helping to encourage safe-haven dollar buying.

ECB President Lagarde's said current uncertainty required assessment of exchange rate developments , indicating possible concern about euro strength.

Potential lock downs in Europe due to a COVID-19 second wave have investors doubting Europe's already fragile recovery.

Euro zone inflation expectations remain fragile after 5-year/5-year inflation linked swaps EUIL5YF5Y=RR peaked in August and now appear to be trending lower.

Options markets indicate growing concerns about EUR/USD downside as risk reversals show vol premiums for EUR/USD calls over puts diminishing while expiries with strikes in the 1.1600-1.1700 range are bought .

CFTC data show euro longs were reduced , a continuation of which should hurt EUR/USD.

A test of 1.1685/1.1725 support is likely. A break could lead to a test of the 1.1500 area.

For more click on FXBUZ

eur/usdhttps://tmsnrt.rs/33K4v8M

(Christopher Romano is a Reuters market analyst. The views expressed are his own)

((christopher.romano@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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