- EUR / USD faces rejection at 1.1930 despite risk on Asian equities.
- Record bullish positioning makes the euro vulnerable to sudden pullbacks.
- A higher than expected preliminary CPI index for Germany is needed to restore the recent uptrend.
EUR / USD is now trading near 1.1910, having hit a high of 1.1930 during Asian trading hours.
The pair pulled back from 1.1930 despite the action of risk in Asian equity markets. According to Reuters, the largest MSCI index of Asia-Pacific stocks outside of Japan is trading at its highest since March 2018. Japanese stocks also gained 1%.
Risk sentiment appears to have been supported by better-than-expected Chinese manufacturing and non-manufacturing PMI figures for August and the recent Federal Reserve decision to take a more relaxed approach to controlling inflation. Despite this, the safe haven dollar is showing some resistance.
One possible reason for the lack of a convincing upward movement in EUR / USD could be the extreme bullish positioning of the market. Speculators increased their bullish bets on the common currency by 14,809 contracts to a new all-time high of 211,752 contracts in the week ended August. 25, the dates released Friday showed.
The record bullish positioning makes the currency pair vulnerable to a sudden pullback. However, more buying pressure could emerge, taking the currency pair to recent highs above 1.1960 if the German preliminary consumer price index for August, due at 12:00 GMT on Monday, surpasses the estimates.