Credit: REUTERS/Thomas WhiteSept 18 (Reuters) - EUR/USD held firm on Friday after the previous session's post-Fed recovery, but price action still suggests future gains could be limited.
EUR/USD bulls have gone absent, keeping the euro on familiar ground, after the Fed's underlying commitment to keep rates on hold through 2023 helped foster Thursday's sharp bounce.
EUR/USD's inability to sustain rallies and sharp pull back after 1.2000 was pierced should be a major concern for longs.
CFTC data show net-long euro positions 109974NNET have been reduced slightly but still remain near all-time highs. Those positions remain as EUR/USD's rally has stalled, which is likely leading to frustration for longs.
If EUR/USD fails to rally soon, longs are likely to look for other investment opportunities and exit those positions which would drive the euro lower.
Price action from daily charts also suggests a topping pattern is forming. EUR/USD bears would need a break of solid support in the 1.1685/1.1715 zone. A break of that support should also lead euro longs to exit positions which could fuel a test of 1.1520/30 support.
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(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.
