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Euro Outlook - Conflicting Technical and Sentiment Signals Leave EUR/USD in Limbo

Euro Outlook - Conflicting Technical and Sentiment Signals Leave EUR/USD in Limbo

Nick Cawley, Senior Strategist
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Euro (EUR/USD) Price, News, and Analysis:

  • EUR/USD is finding 1.2000 hard to overcome.
  • Will next week’s ECB help to steer EUR/USD?
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EUR/USD is seemingly trapped in a tight short-term range with resistance around the 1.2000 level proving difficult to overcome. Talk of sizeable option barriers at this level may be holding back any uptick, while the daily chart and client sentiment shows a contradiction of views over the next move. Next week’s ECB meeting is unlikely to shift the needle, although recent meetings have seen ‘ECB source reports’ hit the market both before and during the announcement adding volatility to the event.

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The daily EUR/USD chart shows a recently formed bearish ‘death cross’ with the 50-day simple moving average now below the longer-dated 200-day sma. This move has now placed all three moving averages in a negative formation and a break below the 50-day sma would leave a cluster of recent lows all the way down to 1.1860 under threat. Before these levels, there is a 23.6% Fibonacci retracement of the March 2020/January 2021 move around 1.1944. As mentioned earlier, the 1.2000 level remains short-term resistance.

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IG Retail trader data show 33.47% of traders are net-long with the ratio of traders short to long at 1.99 to 1.We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/USD prices may continue to rise.Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EUR/USD-bullish contrarian trading bias.

Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -5% 3% -1%
Weekly 64% -35% -6%
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EUR/USD Daily Price Chart (September 2020 – April 16, 2021)

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What is your view on EUR/USD – 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.