EUR/USD inter-markets: still vulnerable below 1.12

EUR/USD remains vulnerable at the beginning of the week, fading the earlier spike to levels above 1.1180 and briefly trading in the negative territory in the 1.1155/50 band.

Today’s gains in spot are bolstered by the renewed selling bias around the greenback, which continues to deflate from Friday’s highs post-Payrolls when measured by the US Dollar Index.

Yields in German Bunds are trading in the negative territory so far today while volatility tracked by VIX has come down from session highs, all removing some tailwinds from the single currency are somewhat limiting the upside.

Positioning according to the latest CFTC report showed EUR-longs have climbed to 5-week highs during the week ended on August 30, although the broader scenario remains net short. In addition, and according to open interest performance, some consolidation in the pair seems quite likely in the near term.

The inability of EUR/USD to retest recent highs well above 1.1300 the figure adds to the view that a top is in place near 1.1370, opening the door at the same time for another visit to the key 200-day sma, currently located near 1.1130. If cleared, spot could see its downside accelerated towards the key area around 1.0820, mainly against the backdrop of speculations of a rate hike by the Fed at some point in the next months.