News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Mixed
Oil - US Crude
Mixed
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • $Gold pulling back, support potential around prior neckline from the double bottom formation $GC https://t.co/zn5e1byJPx https://t.co/ImAEGmKN4G
  • $EURCAD has strengthened by around 100 pips today, bouncing off support at 1.4950 to rise above the 1.5050 level, hitting its highest level in over a month. $EUR $CAD https://t.co/m5bZkeXmV6
  • $AARK is just not digging that 130 figure https://t.co/t8u5DMWUFe
  • #Bitcoin just fell to a fresh intraday low around the 55,000 level after attempting to rebound higher. The crypto sold off sharply over the weekend, falling from 61,000 to the low 50,000s range. $BTC https://t.co/ZOBJmEimB0
  • Hey traders! Get your Monday market update from @DailyFX Chief Strategist @JohnKicklighter 👇 https://t.co/4L9IvPN6qB
  • Technical Levels for US #Dollar, $EURUSD, $GBPUSD, $AUDUSD, #Gold & $SPX - (Webinar Archive) - https://t.co/RmJExSJhKq
  • Forex Update: As of 14:00, these are your best and worst performers based on the London trading schedule: 🇬🇧GBP: 1.03% 🇯🇵JPY: 0.64% 🇨🇭CHF: 0.51% 🇪🇺EUR: 0.37% 🇦🇺AUD: 0.36% 🇨🇦CAD: -0.08% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/N0OkEZmYKA
  • $USDJPY has fallen to its lowest point in over a month today amidst continued weakness from the US Dollar, breaking through support at the 108.50 level to hit an intraday low around 108.00 $USD $JPY https://t.co/lirGaySJpx
  • Indices Update: As of 14:00, these are your best and worst performers based on the London trading schedule: France 40: 0.19% FTSE 100: -0.35% Wall Street: -0.39% Germany 30: -0.45% US 500: -0.48% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/qJAcXrop9l
  • EURGBP - that's a very heavy-looking candle being made today...back below 0.8600 and more? #eurgbp #sterling @DailyFX https://t.co/BKXijUZEew
Euro Forecast: EUR/USD Rate Rally Eyes January High

Euro Forecast: EUR/USD Rate Rally Eyes January High

David Song, Strategist

EUR/USD Rate Talking Points

EUR/USD climbs to a fresh monthly high (1.2238) following the semi-annual testimony with Federal Reserve Chairman Jerome Powell, and the decline from the January high (1.2350) appears to have been a correction in the broader trend rather than a change in behavior as key market themes remain in place.

Advertisement

EUR/USD Rate Pullback Emerges Ahead of Account of ECB Meeting

EUR/USD extends the advance from the start of the week on the back of US Dollar weakness, with the commodity bloc currencies trading to fresh 2021 highs against the Greenback, and the Euro may exhibit a similar behavior as the exchange rate breaks out of the descending channel from earlier this year.

It seems as though swings in risk appetite will continue to sway EUR/USD as the reserve currency still reflects an inverse relationship with investor confidence, and the exchange rate may continue to appreciate ahead of the next European Central Bank (ECB) meeting on March 11 as major central banks rely on their non-standard tools to achieve their policy targets.

A recent speech by ECB Chief Economist Philip Lane suggests the Governing Council will retain the current course for monetary policy as “the central bank is committed to recalibrating its underlying policy instruments if it detects any threat to the favourability of financing conditions,” with the board member going onto say that “we will purchase flexibly according to market conditions and with a view to preventing a tightening of financing conditions that is inconsistent with countering the downward impact of the pandemic on the projected path of inflation.

As a result, the ECB may continue to layout a dovish forward guidance as Lane insists that the central bank “will need to continue providing ample monetary accommodation for an extended period, even after the disinflationary pressures caused by the pandemic have been sufficiently offset,” but the Governing Council appears to be in no rush to deploy more unconventional measures as President Christine Lagarde emphasizes that “our preferred tool is the pandemic emergency purchase programme (PPEP).

In turn, EUR/USDmay continue to retrace the decline from the January high (1.2350) as the ECB adopts a wait-and-see approach after expanding the PPEP by EUR 500B at its last meeting for 2020, but the recent shift in retail sentiment looks poised to persist as the crowding behavior from the previous year resurfaces.

Image of IG Client Sentiment for EUR/USD rate

The IG Client Sentiment report shows 40.22% of traders are currently net-long EUR/USD, with the ratio of traders short to long standing at 1.49 to 1.

The number of traders net-long is 15.61% lower than yesterday and 25.04% lower from last week, while the number of traders net-short is 0.53% lower than yesterday and 8.48% higher from last week. The decline in net-long position could be a function of profit-taking behavior as EUR/USD trades to a fresh monthly high (1.2238), while the rise in net-short interest has spurred a largely tilt in retail sentiment as 47.04% of traders were net-long the pair during the previous week.

With that said, the decline from the January high (1.2350) may turn out to be a correction in the broader trend rather than a change in EUR/USD behavior as the exchange rate breaks out of the descending channel from earlier this year, and the Relative Strength Index (RSI) highlights a similar dynamic as the oscillator clears the downward trend from December.

How to Use IG Client Sentiment in Your Trading
How to Use IG Client Sentiment in Your Trading
Recommended by David Song
Learn More About the IG Client Sentiment Report
Get My Guide

EUR/USD Rate Daily Chart

Image of EUR/USD rate daily chart

Source: Trading View

  • Keep in mind, the EUR/USDcorrection from the September high (1.2011) proved to be an exhaustion in the bullish price action rather than a change in trend following the string of failed attempts to close below the 1.1600 (61.8% expansion) to 1.1640 (23.6% expansion) region, with the Relative Strength Index (RSI) reflecting a similar dynamic as the oscillator broke out of the downward trend to recover from its lowest readings since March.
  • The break/close above the 1.1960 (38.2% retracement) to 1.1970 (23.6% expansion) region pushed EUR/USD to a fresh yearly highs throughout December, with the exchange rate taking out the 2020 high (1.2310) during the first week of January.
  • However, EUR/USD snapped the opening range for 2021 following the failed attempt to test the April 2018 high (1.2414), with the exchange rate trading below the 50-Day SMA (1.2153) for the first time since November.
  • It seems as though the decline from the January high (1.2350) will turn out to be a correction in the broader trend rather than a change in EUR/USD behavior as the exchange rate breaks out of the descending channel from earlier this year, with the move back above the (1.2153) pushing the exchange rate to fresh monthly highs.
  • Need a break/close above the Fibonacci overlap around 1.2220 (38.2% expansion) to 1.2260 (161.8% expansion) to bring the 1.2320 (23.6% retracement) region on the radar, with the next area of interest coming in around 1.2370 (61.8% expansion).
  • Will keep a close eye on the RSI as it approaches overbought territory, with a move above 70 in the oscillator likely to be accompanied by a further appreciation in EUR/USD like the behavior seen in 2020.
Traits of Successful Traders
Traits of Successful Traders
Recommended by David Song
Traits of Successful Traders
Get My Guide

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES