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Euro Latest – US Dollar Weakness Helps EUR/USD Stabilize

Euro Latest – US Dollar Weakness Helps EUR/USD Stabilize

Nick Cawley, Strategist

EUR/USD Price, Chart, and Analysis

  • EUR/USD back above 105.00 on USD weakness.
  • Fed speakers, including Jerome Powell, are out in force this week.

The US dollar is on the backfoot in European trade, and back above 105.00 in US holiday-thinned trade. The US Juneteenth, a federal holiday, sees the US bond markets, the New York Stock Exchange, and the Nasdaq all closed in observance. The US dollar basket (DXY) is currently quoted around 0.30 lower at 104.14 and sits in the middle of last Thursday’s (post-FOMC) dominant 2-point candle.

US Dollar Basket (DXY) – June 20, 2022

Euro Latest – US Dollar Weakness Helps EUR/USD Stabilize

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Over the next few days, there will be important commentary from a range of Federal Reserve members including two days of testimony from Fed chair Jerome Powell on Wednesday and Thursday. The markets will be looking for more clues from the Fed chair after the central bank hiked rates by 0.75% last week and indicated that another 75 basis point hike is likely on the way at the July FOMC meeting. While it can be argued that the Fed has been behind the curve compared to money market rate hike pricing, commentary from Powell needs to be very closely followed.

The daily EUR/USD chart continues to paint a mixed picture with a series of longer-term lower highs now meeting a very short-term series of higher lows. The pair remains below all three simple-moving averages, a negative set-up, while the CCI indicator has just moved out of oversold territory. Looking at short-term levels, last Thursday’s candle between 103.80 and 106.00 should provide initial support and resistance targets.

Learn about different types of Moving Averages

EUR/USD Daily Price Chart - June 20, 2022

Euro Latest – US Dollar Weakness Helps EUR/USD Stabilize

Retail trader data show 68.92% of traders are net-long with the ratio of traders long to short at 2.22 to 1. The number of traders net-long is 3.98% higher than yesterday and 1.07% lower from last week, while the number of traders net-short is 6.18% higher than yesterday and 5.91% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/USD prices may continue to fall. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed EUR/USD trading bias.

What is your view on the EURO – 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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