EUR/USD Retail FX Crowd Remains Net-Short Ahead of ECB June Meeting

Talking Points:

- Euro Rebound at Risk on Dovish European Central Bank (ECB) Rhetoric.

- GBP/USD Continues to Carve Bearish Pattern Ahead of BoE Meeting.

- USDOLLAR Resilience Continues as Fed Officials Highlight 2015 Liftoff.

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EUR/USD

Chart - Created Using FXCM Marketscope 2.0

• Failure to preserve the downward trending channel from the May high (1.1465) may highlight a near-term consolidation in EUR/USD; with the ongoing closes above 1.0850 (78.6% expansion) to 1.0870 (38.2% retracement), may see a move back towards former support around 1.1120 (61.8% retracement).
• Will keep a very close eye on the fresh batch of rhetoric coming out of the European Central Bank (ECB) as the Governing Council is widely expected to retain its current policy; may see President Mario Draghi pledge to carry out the quantitative easing (QE) program until at least September 2016.
• DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-short EUR/USD since March 9, with the ratio currently sitting at -1.77 going into June.

GBP/USD

• GBP/USD remains at risk for a further decline as it fails to retain the bullish formation carried over from April & continues to carve a series of lower highs & lows going into the end of the month.
• With the Bank of England (BoE) anticipated to retain a wait-and-see approach in June, may see a limited market reaction should the central bank refrain from releasing a policy statement.
• In turn, the descending channel in the exchange rate favors the downside target for GBP/USD, with the next level of interest coming in around 1.5180 (23.6% retracement) to 1.5190 (50% retracement).

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USDOLLAR(Ticker: USDollar):

Chart - Created Using FXCM Marketscope 2.0

• Ongoing closes above 11,960 (61.8% retracement) will continue to favor the topside targets for the Dow Jones-FXCM U.S. Dollar as the bullish formation continue to take shape.
• Despite mixed results of the 1Q Gross Domestic Product (GDP) report, the slew of key data prints going into the highly anticipated Non-Farm Payrolls (NFP) report may play a greater role in dictation the dollar as well as the Fed outlook as the central bank pledges to look past the weakness during the first three-months of 2015.
• String of higher-lows in USDOLLAR continues to put 12,049 (78.6% retracement) on the radar.

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--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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