EUR/USD stalls ahead of the key area around 1.1000/20

EUR/USD up 70 pips today

The euro today rose above yesterday's high of 1.0975 but has stalled ahead of 1.1000 and the May high of 1.1018. The chart is showing the same kind of range and triple-top formation as a number of assets. Some -- like AUD/USD and the SPX -- are tentatively breaking out and that might be dominoes falling.

EUR/USD up 70 pips today

Here's the view from JPMorgan's London FX desk:

Yesterday saw the euro shoot up to 1.0975 in the early part of our session, only to see it spend most of the remainder of the session on the defensive, battling what appeared to be an overhang of newly minted, very short term positioning. With equity markets robust in general and the macro community broadly short euro, even without the Merkel/Macron news a moderate, temporary correction to the topside would have been understandable, but the announcement of the proposal of the 500bn euro aid fund sped that process up. There remains plenty of scepticism out there that all 27 EU countries will agree on this proposal, which issues grants, not loans, based on need across the region, but the possibility of it has spurred an element of optimism. Meanwhile, re-openings continue to power forward, so far without any big surprises. This is helping equity market sentiment, although I do feel that the market is choosing to see the glass half full side of just about everything right now. This was evident yesterday as major doubt was cast on the legitimacy of the data released by Moderna around vaccine testing results. While the broad markets did sell off a bit on this, they have since bounced somewhat. This sort of price action has been typical recently and makes us want to remain biased towards a short USD stance, at least for now. The euro frankly did not feel great for much of yesterday and 1.1000/20 is a very important level, so I am back on the sideline there after a tactically bullish day trade. I would note that asset managers were buyers of euro yesterday, and if we see a persistence of this sort of flow against a backdrop of still ample spec shorts, I would consider revisiting a tactical long. I also continue to like running short USD positions versus other currencies like RUB and MXN. For the euro, 1.0910/20 is the area to watch below, followed by 1.0870/80. As mentioned above the topside area of focus is 1.1000/20. A break and close above the latter would put further pressure on shorts.