According to analysts at ING bank, the dollar might have a more balanced positioning now after a large long-squeeze, which could help keep EUR/USD below 1.1500.

Key Quotes:

“A well-telegraphed jump in US inflation to 7% was taken as a “sell the fact” opportunity for FX investors, with a substantial unwinding of dollar longs triggering widespread dollar weakness. The technical break higher in EUR/USD likely put some extra pressure on the dollar in other crosses: whether the 1.1500 resistance holds is key for dollar bulls at the moment.”

“We still think the dollar counter trend does not have long legs, and we see scope for a recovery by the end of this week, as imminent Fed tightening and room to cement views around a fourth Fed hike in 2022 (the Fed’s Bullard sees this as the base case scenario) still offer the greenback – which should now have a less skewed net-long positioning - some appeal on dips.”