EUR/USD traders still bullish as eurozone rate cut nears

EUR price, news and analysis

  • Retail traders using IG are still expecting the EUR/USD price to rally even though the European Central Bank (ECB) is expected to cut Eurozone interest rates later this month.
  • Meanwhile, EUR/USD continues to decline within a downward sloping channel on the daily chart that has been in place for almost a year

Retail traders position for rally

Almost three quarters of retail traders using IG are expecting EUR/USD to rally even though the ECB is likely to cut eurozone interest rates when it meets on 12 September in Frankfurt. It might also decide to restart its quantitative easing (QE) policy.

The figures show that 74.1% of traders are net-long, with the ratio of traders long to short at 2.86 to 1. In fact, traders have remained net-long since 1 July, when EUR/USD traded near $1.1374; the price has moved 3.6% lower since then. The number of traders net-long is 14% higher from last week, while the number of traders net-short is 23.4% lower than last week.

At DailyFX, we typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/USD prices may continue to fall. Traders are further net-long than last week, and the combination of current sentiment and recent changes gives us a stronger EUR/USD bearish contrarian trading bias.

What is forex and how does it work?

From a technical perspective, EUR/USD has been falling within a downward sloping channel on the daily chart since it reached a high of $1.1816 on 24 September last year. That too suggests further losses to come unless the channel resistance line, currently close to $1.13, is broken.

EUR/USD price chart, daily yimeframe (13 July – 4 September 2019)

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