US Markets

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

Credit: REUTERS/DADO RUVIC

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.

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.

Latest Markets Videos

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More