Analys från DailyFX
EUR/USD Reaches New Highs as NFP Misses Expectations
Talking Points:
- EUR/USD Trades to New Highs as NFP Misses Expectations
- Price Remains Supported Above the 10 Day EMA at 1.1197
- IG Client Sentiment Remains Extreme at -2.58; 72% Net-Long
The EUR/USD has reached new yearly highs this morning, after the release of U.S. Non-Farm Payrolls (May) missed expectations. Expectations for today’s NFP event were set initially at 180k, but were reported at an actual 138k. While today’s NFP headline number garners the most attention, traders should also note that U.S. Unemployment Rate (May) figures were released at 4.3%, which was better than the expected 4.4%.
What’s next for the Euro and US Dollar? Read our price forecast here.
EUR/USD Daily Chart Averages
Technically this morning’s rally can be seen as a continuation of an ongoing EUR/USD uptrend. As seen in the daily chart below, the pair remains above both its 10 day EMA (exponential moving average) and 200 day MVA (simple moving average). For Friday’s trading, the 10 day EMA is currently located at 1.1197. If the EUR/USD continues to rise, traders may reference this point as a value of support in an ongoing uptrend.
In the event of a bearish reversal, traders may begin looking for prices to turn lower under today’s current high at 1.1282. Going into this week’s close, traders should also continue to monitor the EUR/USD’s previous swing high at 1.1268. This value was considered a previous value of resistance for the pair. With today’s breakout however, 1.1282 may now be seen as a value of daily support.
Why and how do we use IG Client Sentiment in trading? See our guide.
Sentiment figures for the EUR/USD are little changed for today’s session despite the pair’s advance in price. IG Client Sentiment remains at negative extremes, reading at -2.58. This value indicates that 72% of traders are currently net-short the EUR/USD. When interpreted as a contrarian indicator, this negative extreme suggests that the EUR/USD may continue to trend higher. In the event that the EUR/USD closes the week off its highs, it would be expected to see these sentiment totals remain near their current values. Alternatively, if the EUR/USD begins to reverse lower, traders may look for sentiment totals to neutralize and back away from their present extremes.
— Written by Walker, Analyst for DailyFX.com
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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
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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
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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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