EURUSD: Extended rally into daily supplyOver the past few weeks, EURUSD has continued to extend higher, pushing deep into a daily supply zone that overlaps with a previous distribution area. The ascending channel is still intact, but I’m starting to see some loss of momentum and the first signs of selling pressure within the 1.1780–1.1850 range.
On the daily chart, price has left a potential imbalance open, with a more interesting demand structure sitting between 1.1700 and 1.1650. If recent lows are taken out, I would expect price to rotate back into that zone to fill liquidity and test buyer strength. Only a clean break and hold above 1.1850 would invalidate the corrective scenario and reopen the path toward higher highs.
The COT data shows:
Non-commercials remain net long on the euro, but positioning is not increasing as aggressively as in previous months.
On the Dollar Index, non-commercials still hold a meaningful short exposure, but they’ve been gradually reducing it.
In my view, this suggests a market that may have already priced in much of the pro-euro bias, creating room for a short-term technical reset.
Seasonality
Historically, December tends to be positive for EURUSD, but the final part of the month often brings volatility and rebalancing flows — consistent with the idea of a pullback before any renewed extension.
Retail sentiment
Current sentiment shows roughly 81% of retail traders short.
Typically, that’s a contrarian bullish signal. However, given that we’re trading inside supply and the structure is stretched, I interpret it as the uptrend is still alive, but the risk of a corrective phase is increasing.
Invalidation
This corrective view is invalidated with daily closes above 1.1850 and strong continuation inside the channel.
