EUR/USD Shorts Face Short Squeeze as Gold Rally Presses On

Gold's recent rally has sparked concerns of a potential short squeeze in the EUR/USD market, as investors who have been betting against the euro may be forced to cover their positions.

The sharp increase in gold prices, which has coincided with renewed pressure on the dollar, suggests that the euro may still have room to rise.

Unlike January, when speculative long positions in the euro reached a record high, current positioning supports an even bigger rise in the EUR/USD pair.

In fact, without the restraint of a large long position, EUR/USD could move well beyond 1.20, making a short squeeze more likely.

Technically, a break above the 200-month moving average at 1.1851 would have very bullish implications for the pair, potentially leading to a move toward 1.28 if sustained.