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EUR/GBP Price Latest: Back Above Supportive Short-Term Trendline

EUR/GBP Price Latest: Back Above Supportive Short-Term Trendline

Nick Cawley, Strategist

EUR/GBP – Price, Chart and Analysis:

  • EUR/GBP pushing higher as EU leaders meet to discuss EUR750 billion recovery plan.
  • Retail trader data shows EUR/GBP net-longs falling.

The EU heads of state are in Brussels today, to start discussions over a EUR750 billion COVID-19 recovery plan in an effort to boost the ailing Eurozone economy. The plan, so far suggested as EUR500bn in grants and EUR250bn in loans, will likely run into opposition from four or five member states who are demanding strict conditions and controls on the handouts, leaving a decision unlikely this weekend. The Netherlands continue to push back against the amount of grants on the table, while the other members of the ‘frugal four’ (Austria, Sweden and Denmark) are looking for more control in the way the funds are dispersed. The post-COVID-19 recovery is unlikely to be passed this weekend but it is expected to be passed before the Autumn break with amendments to make sure that all member states are onside.

The latest IG Client Sentiment Report shows retail traders trimming their net-long EUR/GBP positions recently. Retail trader data shows 37.62% of traders are net-long with the ratio of traders short to long at 1.66 to 1.The number of traders net-long is 10.73% lower than yesterday and 17.75% lower from last week, while the number of traders net-short is 0.66% higher than yesterday and 14.87% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/GBP prices may continue to rise. The combination of current sentiment and recent changes gives us a stronger EUR/GBP- bullish contrarian bias.

The daily EUR/GBP chart shows that the pair have regained the recent uptrend and now trade back above all three moving averages. The recent move higher has also taken out the 38.2% Fibonacci level at 0.9035, leaving Tuesday’s 0.9113 high and the late June multi-month high at 0.9176 as short-term targets if positive sentiment persists.

EUR/GBP Daily Price Chart (January – July 17, 2020)

EUR/GBP Price Latest: Back Above Supportive Short-Term Trendline

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What is your view on EURGBP – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

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

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