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CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

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 vigilant Source: Bloomberg

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 client positioning Source: DailyFX
EUR/USD client positioning Source: DailyFX

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

EUR/USD daily Source: IG charts
EUR/USD daily Source: IG charts

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