EUR/USD jumps as euro bulls cheer EU summit deal. But will it last?
EUR/USD price action has ripped higher in large thanks to the monumental stimulus package revealed by EU officials, but can the euro sustain its advance?
EUR/USD eyes multi-year trend resistance as bulls make push
- EUR/USD extends its climb as euro bulls push the bloc currency to a 23-month high
- Euro price action has benefited from a €750 billion stimulus deal just reached
- Euro could keep advancing judging by retail forex trader positioning
The euro has been ripping higher over the last two months. Euro strength largely stems from positive tailwinds provided by a €750 billion recovery fund that France and Germany proposed in May, which was just approved by eurozone officials at the European Union (EU) summit earlier this week.
Desperately needed fiscal stimulus looks to boost the coronavirus-battered economy and accelerate gross domestic product (GDP) growth prospects. In turn, this has helped facilitate a sharp 7% advance by EUR/USD off the $1.08 price level.
EUR/USD price action now hovers a touch below the $1.16 level following recent euro gains, but is there room for the most liquid and heavily traded currency pair to continue its climb? Looking at a EUR/USD chart with weekly candlesticks a broad bearish trend can be identified by the series of lower highs printed over the last several years.
Spot EUR/USD is still some way from running into this technical obstacle that may serve as a potential topside objective for euro bulls, however. It is also worth mentioning that this resistance zone happens to align with the 23.6% Fibonacci retracement level of EUR/USD’s trading range since 2008.
That said, shifting focus to IG Client Sentiment hints at the possibility for more euro upside against its dollar peer. According to the latest IG Client Sentiment Report, 29.3% of EUR/USD retail traders are net long on the major currency pair.
This suggests a bullish trading bias since we typically take a contrarian view to crowd sentiment, which is widely driven by retail traders’ tendency to position against the prevailing trend.
This information has been prepared by IG, a trading name of IG Markets 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.
Start trading forex today
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets