Analys från DailyFX
EURUSD Outlook Remains Bullish Heading into ECB
What’s inside:
- EURUSD looks poised to make a move higher this coming week
- Upward tilting consolidation period and break above key levels puts focus on 2016 high or better
- ECB on Thursday could be a significant catalyst, ‘path of least resistance’ suggest bullish outcome
Looking for a longer-term view on EURUSD? Check out the Q3 Forecast.
Last week, the euro poked its head up above the August 2015 trend-line and horizontal resistance running back over two years, but was quickly swatted lower over the next couple of sessions. On Friday, however, with the help of poor U.S. economic data EURUSD was able to recoup those losses, closing the week back just above noted resistance. So far, this month we are seeing a series of higher lows and higher highs develop in an upward sloping consolidation phase. This sets the single-currency up for higher prices in the week ahead, continuing in line with our broader bullish bias of seeing the 2016 high (or better) soon. With the ECB coming up on Thursday there we have major catalyst which may underpin or undermine this bias. From a trend perspective, the ‘path of least resistance’ suggests we will see a bullish outcome for the euro on Thursday. In this event, eyes will be on how the market will react to the 2016 high at just over 11600. Beyond that high we will look to the August 2015 high at just over 11700 as the next price objective.
It will require a sharp break lower to undermine a constructive outlook. Should we see a strong failure to the downside and break of the April trend-line, along with trade below 11285, then we’ll need to reassess. In the unlikely event we see such a move, not only will brakes be put on an upward bias, but we would be forced to consider taking a bearish stance.
All-in-all, at this time there is little to suggest the euro doesn’t want to trade higher, and until there is we will run with a strong euro thesis. Join me live on Wednesday at 9 GMT and we’ll discuss price action just ahead of the ECB.
EURUSD: Daily
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—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email bysigning up here.
You can follow Paul on Twitter at@PaulRobinonFX.
What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email bysigning up here.
You can follow Paul on Twitter at@PaulRobinonFX.
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
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