Skip to Content
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. See our updated Privacy Policy here.

Free Trading Guides
Please try again

Live Webinar Events


Economic Calendar Events


Notify me about

Live Webinar Events
Economic Calendar Events






More View More
EUR/USD Likely to Fall From Three Year Highs

EUR/USD Likely to Fall From Three Year Highs

Nick Cawley, Senior Strategist


What's on this page

EUR Talking Points

- Renewed EUR strength will not help the central bank’s stated aim of boosting inflation to target.

- The US dollar may get a boost from Friday’s US Q4 GDP release.

Check out our new Trading Forecasts - they’re free and have been updated for the first quarter of 2018.

ECB Rhetoric May Temper EUR/USD Rise in the Short-Term

The recent rally in the single currency against the US dollar will be causing ECB President Mario Draghi a few headaches as a strong EUR is set to keep inflationary pressures in the single-bloc lower for longer. And Draghi may need to outline a slightly more dovish ECB stance at today’s monetary policy announcement and subsequent press conference to take the heat out of the single-currency. Expectations that the ECB may outline the timetable for the reduction/ending of the bond buying program (QE) may not be met, with Draghi likely to re-confirm that there will be no sudden end to QE when the current program ends in September.

Euro-Zone inflation slipped lower in the final month of 2017. December Euro-Zone CPI fell to 1.4% from a prior 1.5%, once again missing the ECB’s mandate of close to or around 2%, while core inflation was 1%.

EUR/USD may also come under selling pressure at the end of the week with the release of US Q4 GDP. Current expectations are centered on 3% and any beat on the upside may see US dollar shorts covered ahead of the weekend and next Wednesday’s – January 31 – FOMC policy decision.

DailyFX analysts will be providing live coverage of The ECB Rate Decision and the US Q4 GDP release.

A look at the daily EUR/USD chart also shows that the stochastic indicator is looking to turn lower from its current 80+ level, a potentially bearish technical trigger.

EUR/USD Price Chart One Daily Timeframe (July 30, 2017- January 25, 2018)

Chart by IG

EUR/USD Bullish Run May be Coming to an End

IG Client Sentiment data show 33.2% of traders are net-long EURUSD with the ratio of traders short to long at 2.01 to 1. The number of traders net-long is 6.8% lower than yesterday and 1.6% higher from last week, while the number of traders net-short is 12.9% lower than yesterday and 2.5% 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. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current EURUSD price trend may soon reverse lower despite the fact traders remain net-short.

DailyFX provide a wide range of free, constantly updated Trading Guides including Forex for Beginners, Top Trading Lessons and The Number One Mistake Traders Make.

--- Written by Nick Cawley, Analyst

To contact Nick, email him at

Follow Nick on Twitter @nickcawley1

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