EUR/USD, GBP/USD Moves Supported by Retail Positioning Shifts
- EURUSD firm after ZEW surveys, GBPUSD lower post-UK CPI.
- Both EURUSD and GBPUSD moving against retail crowd positioning.
- See the October forex seasonality report that favors US Dollar weakness.
FX markets continue to move against retail traders - notably in EURUSD and GBPUSD, where the crowd is net-short and net-long, respectively. Data overnight isn't helping the retail crowd's cause either, with a surprisingly disappointing September UK Consumer Price Index report showing deflation, and thus, sinking the British Pound (the retail crowd is still net-long by a ratio of over 2.5 longs for every 1 short).
On a day like today where there's a very limited US economic calendar, earlier releases (like the UK CPI report and German and Euro-Zone ZEW surveys) and policy speeches (like the one the Federal Reserve's James Bullard will give today) tend to carry more weight; the tradiing conditions currently present in FX markets are unlikely to change barring some unforeseen newswire risk emerging unexpectedly later in the session. Indeed, those trading USD-pairs are most likely focusing in on tomorrow's September US Advance Retail Sales report and the Federal Reserve's Beige Book releases.
See the above video for a fundamental overview of the USD-complex, plus technical considerations in EURUSD, GBPUSD, AUDUSD, USDJPY, and the USDOLLAR Index.
Read more: AUD/USD, EUR/USD Triangles Eye Continuation Targets
--- Written by Christopher Vecchio, Currency Strategist
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