Asset managers and hedge funds have been placing big bets pushing net long positions in favor of the EURO by 12% since June. However, this sentiment for the Euro may already be signaling an over-crowed market as exposures reach extreme levels. The sentiment for the Dollar has been diminishing on the negative impacts of the virus. We have seen 90% reduction in Net long positions since the beginning of June. We have also observed a extreme signal as net long contracts reach all time low. The dollar index is reflecting the perception of large speculators given the sustained decline in the past week.
EURUSD technical setup see prices above the monthly highs of May @1.1139. We would expect support to hold at this level for further push to the upside. A 30-year cycle may also support the play for the Euro . EURUSD rest above the 200 on the daily time frame.
In our opinion, any improvements in the daily incidents of the virus may invalidate the outlook for the dollar