CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

EUR/USD outlook: EUR/USD vulnerable to month-end volatility

Euro recovers from US Dollar short squeeze, however, EUR/USD remains vulnerable below $1.192.

Choppy price action across the G10 complex with the Euro hovering within close vicinity to the $1.19 handle. That said, with the US Thanksgiving Holiday and month-end upon us, market liquidity is likely to be lighter and thus flow driven moves stemming from month-end rebalancing is likely to be exacerbated as evidenced on Monday. While the Euro has recovered from the recent USD short squeeze, EUR/USD has stopped short of reaching key topside resistance at $1.192, as last week’s high zone holds ($1.188-$1.90).

The Euro, however, is not without short-term risks, which as it stands, has largely taken a blind eye to. Poland and Hungary have vetoed further progress over the EU Budget and Recovery Fund in response to the rule of law. Although, with minimal signs of a solution to break the impasse, concerns will likely rise over a delay in the implementation of the recovery fund. A risk that markets appear to be under-pricing at this current stage.

To that end, with US Dollar short positioning remaining stretched, their remains a continued risk of USD short squeezes, leaving EUR/USD vulnerable to pullbacks towards $1.18. A break below raises scope for a move to $1.175, while a move above $1.192 would negate an initial downside bias.

EUR/USD chart: hourly timeframe

IG client sentiment: EUR/USD

Retail trader data shows 28.51% of traders are net-long with the ratio of traders short to long at 2.51 to 1. The number of traders net-long is 6.98% lower than yesterday and 16.78% lower from last week, while the number of traders net-short is 4.38% lower than yesterday and 2.74% lower from last week.

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.

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Start trading forex today

Find opportunity on the world’s most-traded – and most-volatile – financial market

  • Trade spreads from just 0.6 points on EUR/USD
  • Analyse with clear, fast charts
  • Speculate wherever you are with our intuitive mobile apps

See an FX opportunity?

Try a risk-free trade in your demo account, and see whether you’re onto something.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off

See an FX opportunity?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Get spreads from just 0.6 points on popular pairs
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See an FX opportunity?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.