After a period of low volatility and comparative USD weakness it seems we may be seeing a change in both volatility and direction. According to a "Commitment of Traders" report released last Friday Hedge funds had cut their net-long exposure to the euro by more than half during the week ending November 5. Having reduced their euro exposure "BANG" the ECB stuns the market with a rate cut that sent traders to cut their euro positions even more. The EUR/USD bounced back from the its lows and now trades around 1.3390 but with perhaps the beginning of the Fed's forewarned tapering about to begin combined with stronger data from the US are we seeing a new direction for EUR/USD?

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