The EUR/USD price formed an inverted cup and handle pattern as bets against the euro continued. The pair dropped to a low of 0.9930 on Monday, which is close to this month’s low of 0.9900. It has fallen by more than 4.2% from its highest point this month.
Bets against euro continue
The euro has come under intense pressure as investors continue worrying about the health of the European economy. According to the Financial Times, wagers that the euro will fall in value against the US dollar has risen to the highest level since the pandemic started.
Data published last Friday by the CFTC showed that speculators increased their net short positions on the euro to 44,100 contracts up from the previous 42,800. This was the biggest short positioning since the end of March 2020 when the pandemic was starting.
The EUR/USD forex crash reflects the rising fear that the European economy will continue deteriorating in the coming months as energy prices rise. European gas prices jumped to an all-time high as Russia continued squeezing the bloc. It is expected to close the Nord Stream 1 gas project for a few days for maintenance.
Therefore, with gasoline prices rising, analysts believe that the bloc’s inflation will continue rising in the coming months. Precisely, they expect that the bloc’s inflation rose to a record high of 9% in August.
The EUR/USD sell-off is also because of the latest statement by Jerome Powell at the Jackson Hole Symposium. In his speech, he reiterated that the bank will continue hiking interest rates in the coming months and leave them high. His view was in line with what other Fed officials like Mary Daly, Charles Evans, and Neel
