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Forex pairs in this Article » EUR/USD (London) - Research teams noted that the EUR/USD has been under heavy selling pressure as a result, building on the move that we’ve seen post-FOMC.

Key Quotes:

“Eurozone CPI estimates followed the weak indication from yesterday’s German numbers, adding to the disappointment on German unemployment and retail sales, as well a slew of second tier data from around the EZ. From a bit broader context, the softer data also reinforces the view that Draghi will be justified in emphasizing the downside risks at next week’s ECB meeting”.

“At the start of the week we noted a potential turn in risk reversals and the attractiveness of downside protection”.
“That move has extended sharply toward stronger put pricing, suggesting the spot move in EUR/USD caught the market by surprise, and that there may be more shakeout of EUR/USD longs to come”.

“The latest CFTC data on speculative positioning showed the strongest EUR net longs since the spring of 2011 (as of October 8th). We can only assume those longs were held through the rest of the month with the grind higher in the spot rate, suggesting plenty of potential for long liquidation that could add to pressure on the pair. As we’ve noted often, the message from short term rates still suggests EUR/USD would be more consistent near 1.32/33 (chart to the right)”.
“On the charts, EUR/USD is currently testing key short term support near 1.3650. The next major support below is spotted about a big figure lower near 1.3550”.
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