Skip to content

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

Euro may rise as short bets follow EUR/USD to 2008 trendline

The euro may rise versus the US dollar as retail investors persistently sell the trend. This has pushed EUR/USD to test critical falling resistance from 2008.

Euro and dollar Source: Bloomberg

Euro, EUR/USD IG client sentiment - talking points

EUR/USD IG client sentiment outlook

The euro could be readying to extend recent gains against the US dollar, based on signals from IG client sentiment (IGCS). On 6 August, the IGCS gauge implied that roughly 29% of retail investors were net-long EUR/USD. Exposure to the upside decreased by 25.92% and 16.51% over a daily and weekly basis respectively. Meanwhile, net-short bets have increased by 5.87% and 2.92% over the same periods.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short hint the world’s most-liquid forex pair could continue climbing. Recent changes in positioning offer a more potent bullish contrarian trading bias for EUR/USD. From a psychological standpoint, this could speak to the persistence of investors attempting to pick the next topping point in the euro.

EUR/USD client positioning

IGSC chart Source: IG charts
IGSC chart Source: IG charts

Euro technical analysis

With August now underway, EUR/USD is attempting to push above long-term falling resistance from 2008 – see monthly chart below. The July candle closed within this zone of resistance, maintaining the dominant downside bias in the euro. With IGCS signals pointing to the bullish side, this has placed the focus on the $1.1877 – $1.2043 inflection zone. Beyond that sit peaks from 2018, in the $1.2413 – $1.2556 region.

EUR/USD monthly chart

EUR/USD monthly chart Source: TradingView
EUR/USD monthly chart Source: TradingView


The daily chart shows that falling resistance from 2008 is already in the process of being taken out, though clear upside confirmation seems to be lacking. Negative RSI divergence has also emerged as prices push into the 2010-2012 inflection zone. This is a sign of fading upside momentum which can at times precede a turn lower. Such an outcome could place the focus on the 20-day simple moving average (SMA) below.

In the short to medium term, two layers of support could maintain the upside bias should prices decline instead. These form rising support from May and March – red lines on the daily chart below. Taking out the former could shift the focus to the downside. The latter could then reinstate an upward trajectory. Otherwise, clearing $1.2043 exposes the 78.6% Fibonacci retracement at $1.2145 on the way towards highs from 2018.

EUR/USD daily chart

EUR/USD daily chart Source: TradingView
EUR/USD daily chart Source: TradingView

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.

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. Please see important Research Disclaimer.

Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

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

Find out more

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

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

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 Tuesday 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…

<h3>How much does trading cost?</h3>
<h3>Find out about IG</h3>
<h3>Plan your trading</h3>

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.