EUR/USD bias remains bullish, but stays vigilant on second wave concerns
EUR/USD remains skewed to the upside, but coronavirus concerns remain in focus.
EUR/USD analysis and news
- A little less uncertainty for the euro
- IG sentiment signals are bullish for EUR/USD
A little less uncertainty for the euro
Yesterday, German lawmakers had voted in favour of the European Central Bank's (ECB’s) purchase program, therefore putting an end to the legal stand off between the German constitutional court and the ECB.
As such, with the euro facing a little less uncertainty, dips in the currency are likely to find support. That said, caution is a must given the concerns of a second wave of Covid-19 cases hitting the southern states of the US.
With today’s session likely to be a tepid affair amid the US market holiday, price action in EUR/USD is likely to remain somewhat muted as markets lack direction and thus hold its $1.12-$1.13 range. Nonetheless, market attention will be placed on the latest Covid-19 case figures in the US.
IG sentiment signals are bullish for EUR/USD
Retail trader data shows 41.44% of traders are net long with the ratio of traders short to long at 1.41 to one. The number of traders net long is 1.03% higher than yesterday and 1.61% lower from last week, while the number of traders net short is 4.42% lower than yesterday and 7.32% 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.
Yet traders are less net short than yesterday and compared with last week. Recent changes in sentiment warn that the current EUR/USD price trend may soon reverse lower despite the fact traders remain net short.
EUR/USD technical outlook
EUR/USD had failed break above resistance situated at $1.1293, which marks the 76.4% Fibonacci retracement of the $1.1497-$1.0635 sell off.
That said, the pair remains biased to the upside with dips finding support from $1.1180-$1.1200. Below here would negate the bullish bias. On the topside, bulls will look a make a breach the 76.4%, which could pave the way for a test of the descending trendline from the 2020 peak.
EUR/USD price chart: daily time frame
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