EURUSD Reverses Sharply Last week holds the potential to mark a clear turning point for EURUSD. The weakness we saw on the back of the ECB meeting, further strengthened by the USD rally in response to Friday’s jobs data, has been accompanied by a sharp shift in retail sentiment. The retail community is now around 70% long the pair, suggesting room for a deeper reversal lower.ECB Pivot In Sight While ECB chief Lagarde did her best to hammer home the point that the ECB will continue with rate hikes until inflation is back at target, the market seemed solely focus on her comments that after the next .5% hike in March, the ECB will assess and make decisions on a data-dependent, meeting by meeting basis. This has seen an unwinding of long positions in EUR which had built up prior to the meeting. Bumper NFP Report Sends USD HigherOn Friday, a bumper set of US labour market data saw USD heavily bid as US rate hike projections came into question. With the risk now that USD remains well-bid near-term while EUR continues to sell-off, EURUSD looks poised for further losses. Expect Fed speakers across the week to stand behind their hawkish sentiment which should drive the reversal further.Technical ViewsEURUSDFollowing the reversal lower last week, the pair is now testing support at the 1.0785 level along with the falling wedge support line. With retail traders long and with momentum studies turning bearish, a break lower here will open the way for a move down towards the 1.0364 level next and bull channel lows.
