Sentiment Analysis EUR/USD, EUR/GBPNext week’s economic calendar contains a raft

EURO WEEKLY FORECAST – BEARISH

• EUR/USD finding simple moving averages tricky to overcome.
• EUR/GBP posting another red candle.

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Euro Fundamental Analysis

Next week’s economic calendar contains a raft of high-importance data releases, and events, that are likely to impact the Euro and the US dollar. In the Euro Area and Germany, there are preliminary monthly inflation readings and quarterly growth reports, while in the US there are consumer sentiment and ISM manufacturing and services data releases. The main drivers of price action and sentiment next week however will be the latest FOMC policy decision, and press conference, on Wednesday, and the monthly US Jobs Report (NFP) on Friday.

For all economic data releases and events, see the real-time

EUR/USD Technical Analysis

The Euro has pushed higher against the US dollar over the second half of this month despite growing expectations that the US will delay starting their interest rate cutting cycle. The ECB is all set to cut rates in June and the narrowing of the rate differential between the two currencies should work in the US dollar’s favor and push EUR/USD lower. The pair touched 1.0750 earlier today but reversed quickly back to the 1.0710 level and EUR/USD now nears the 1.0700 support level taken off the mid-February swing low. Below here, 1.0635 guards 1.0600. If EUR/USD continues to push higher, perhaps helped by next week’s economic data and events, resistance is seen at 1.0787 and 1.0800.

EUR/USD DAILY PRICE CHART

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EUR/USD Sentiment Analysis

Retail trader datashows 52.91% of traders are net-long with the ratio of traders long to short at 1.12 to 1.The number of traders net-long is 5.62% lower than yesterday and 22.12% lower than last week, while the number of traders net-short is 3.76% lower than yesterday and 36.53% higher than last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/USD prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current EUR/USD price trend may soon reverse higher despite the fact traders remain net-long.

EUR/GBP Technical Analysis

After hitting a multi-month high of 0.8645 at the start of the week, EUR/GBP has moved sharply lower as Sterling grabbed a bid. The CCI indicator showed the pair to be extremely overbought on Monday and the subsequent sell-off has now taken the pair back into neutral territory. All three simple moving averages are in play and a break below the 50-day sma (blue line) could see EUR/GBP test 0.8550. Below here historical support is seen on either side of 0.8500. A prior cluster of highs around 0.8590 will act as initial resistance before the 200-day sma at 0.8604 comes into play.

EUR/GBP DAILY PRICE CHART

EUR/GBP Sentiment Analysis

Recent retail trader data reveals that 64.91% of traders are net-long on EUR/GBP, with a long-to-short ratio of 1.85 to 1. The increasing number of net-long traders, which has risen by 5.25% since yesterday and 13.73% from last week, coupled with the decreasing number of net-short traders, down 6.79% and 5.50% respectively, indicates a growing bullish sentiment among retail traders. However, this sentiment is often viewed as a contrarian indicator, suggesting that EUR/GBP prices may continue to fall, reinforcing a stronger EUR/GBP-bearish contrarian trading bias.