EUR/USD: shorts at growing risk of a holiday squeeze (Reuters)

Originally posted by efxnews:

EUR/USD recovered on Wednesday even though the European Union rejected Italy's fiscal plans.
Traders were relieved after Italian Prime Minister Giuseppe Conte expressed concern about the government bond spread and pledged reforms.

Euro speculative shorts remain vulnerable to a squeeze higher as Thursday's U.S. Thanksgiving holiday thins trading volumes.

IMM data for the week ending 13 Nov. showed a futures market short of an equivalent cash EUR/USD position of $4.6 billion, down from $5.9 billion the previous week, though EBS flow data since 13 Nov. shows some euro shorts may have been reestablished.

Tuesday's long black candlestick line and the long upper shadow on Wednesday's candle are bearish signs, but support has built up ahead of the 1.1344 Fibonacci level, a 50 percent retrace of the 1.1216 to 1.1472 recent recovery.

An overshoot is possible towards the 1.1516 Fibonacci level, a 50 percent retrace of the 1.1815 to 1.1216 (September to November) drop, but that could be stymied by Friday's release of German GDP and euro zone PMIs.

IMM (International Money Market) positions chart: