EUR, EUR/USD, Technical Analysis, Retail Trader Positioning – IGCS Update
- EUR Six consecutive weeks of losses are on track
- Individual traders remain bullish bets
- EUR/USD Facing rising approval ratings since November
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The euro has fallen against the US dollar for the sixth consecutive week. If confirmed, this would be the EUR/USD’s longest losing streak since 2018. Meanwhile, individual traders have become increasingly bullish on the euro. You can see this by looking at his IG Client Sentiment (IGCS), which often acts as a contrarian indicator. With that in mind, could the single currency be more painful?
EUR/USD Sentiment Outlook – Bearish
The IGCS gauge shows that around 67% of retail traders are net long in the euro. As most of them are still skewed to the upside, this continues to suggest that the EUR/USD may fall further. This is due to a 22% and 33% increase in upward exposure compared to yesterday and last week respectively. With that in mind, the combination of overall exposure and recent changes creates a stronger bearish contrarian trading bias.
euro daily chart
On the daily chart, the EUR/USD fell again to just above the July low of 1.0834. The short-term downtrendline from July has been the driving force behind the single currency’s depreciation. See chart below. The euro is currently facing a rising range of support since November. A confirmed breakout could open the door to reversing the broader bullish technical bias.
That would expose the 78.6% Fibonacci retracement level of 1.0772 on the way to the May low of 1.0635. Otherwise, pushing the short-term downtrend line up exposes the midpoint of the Fibonacci retracement at 1.0956 before focusing on the 38.2% level at 1.1031.
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— By Daniel Dubrowski, Senior Strategist, DailyFX.com
Daily FX We provide technical analysis on Forex news and trends affecting the global currency markets.