The exchange rate has been going through a remarkable 2020, because it has risen 11%. Investors still keep their massive short positions in dollar and this could lead to a mid- longterm upward dollar’s reaction, since at the level 1,1800 there is strong resistance.

It makes sense that those who have open short positions in dollar, will try to reduce their exposure in case of an upward dollar’s reaction, because it appears that a potentially bad situation is taking shape. As captured in the following graph, if the exchange rate manages to stabilize over 1,1800 for a quarter, then a long- term momentum of the european currency would be a standard outcome and could lead the currency to higher levels.