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

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

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

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

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

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices 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.