Currencies have a positive correlation with expected future interest rates. Bond yields on the short end of the curve are primarily driven by interest rate expectations which means that short-term bond yields embed expected future interest rates. Currency pairs represent two nations so it’s imperative to compare the two nations' bond yields.
Interest rate differential
Interest rates differential which acts as a leading indicator for exchange rate movement signal that the rally on the EURUSD is close to a pause.
Positioning
Bullish Speculative bets on leveraged funds are approaching an all-time high in 2021. As leveraged funds take profits on those positions Euro will experience a downward pressure.
Price action
EURUSD has been on the sideways channel for the better part of the week a significant drop below 1.1195 will be a good signal to enter a short position targeting 1.1.
Interest rate differential
Interest rates differential which acts as a leading indicator for exchange rate movement signal that the rally on the EURUSD is close to a pause.
Positioning
Bullish Speculative bets on leveraged funds are approaching an all-time high in 2021. As leveraged funds take profits on those positions Euro will experience a downward pressure.
Price action
EURUSD has been on the sideways channel for the better part of the week a significant drop below 1.1195 will be a good signal to enter a short position targeting 1.1.