We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies. You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.
Note: Low and High figures are for the trading day.
Note: Low and High figures are for the trading day.
Note: Low and High figures are for the trading day.
Note: Low and High figures are for the trading day.
Note: Low and High figures are for the trading day.
Note: Low and High figures are for the trading day.
EUR/USD carves a series of lower highs and lows after testing the 50-Day SMA (1.0570) earlier this week, but the exchange rate may face range bound conditions over the coming days as it appears to be defending the monthly low (1.0359).
EUR/USD bounces back from a fresh weekly low (1.0382) after showing a limited reaction to the unexpected rise in Germany’s Unemployment report, and the exchange rate continue to track the negative slope in the moving average with the Federal Reserve on track to implement higher interest rates throughout the rest of the year.
However, it seems as though the ECB will shift gears next month as President Christine Lagarde states that “i n July we intend to raise our policy rates for the first time in 11 years ,” and it seems as though the Governing Council will take additional steps over the coming months as the central bank head insists that “ the process of normalising our monetary policy will continue in a determined and sustained manner. ”
The comments suggest the ECB will follow a similar path to its US counterpart in an effort to combat inflation, and it remains to be seen if the Governing Council will continue to adjust the forward guidance at its next meeting on July 21 as President Lagarde warns that “ if the medium-term inflation outlook persists or deteriorates, a larger increment will be appropriate at the September meeting .”
Until then, EUR/USD may face range bound conditions if it manages to defend the monthly low (1.0359) , while the tilt in retail sentiment looks poised to persist as traders have been net-long the pair for most of the year.
The IG Client Sentiment report shows 68.51% of traders are currently net-long EUR/USD, with the ratio of traders long to short standing at 2.18 to 1.
The number of traders net-long is 2.24% lower than yesterday and 2.25% higher from last week, while the number of traders net-short is 5.56% lower than yesterday and 4.25% higher from last week. The rise in net-long interest has fueled the crowding behavior as 60.83% of traders were net-long EUR/USD last week, while the rise in net-short position comes as the exchange rate carves a series of lower highs and lows after testing the 50-Day SMA (1.0570).
With that said, EUR/USD may continue to track the negative slope in the 50-Day SMA (1.0570) as the Federal Open Market Committee (FOMC) normalizes monetary policy faster than its European counterpart, but the exchange rate may face range bound conditions over the coming days if it manages to defend the monthly low (1.0359).
--- Written by David Song, Currency Strategist
Follow me on Twitter at @DavidJSong
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Leveraged trading in foreign currency or off-exchange products on margin carries significant risk and may not be suitable for all investors. We advise you to carefully consider whether trading is appropriate for you based on your personal circumstances. Forex trading involves risk. Losses can exceed deposits. We recommend that you seek independent advice and ensure you fully understand the risks involved before trading. FX PUBLICATIONS IS A MEMBER OF NFA AND IS SUBJECT TO NFA'S REGULATORY OVERSIGHT AND EXAMINATIONS. HOWEVER, YOU SHOULD BE AWARE THAT NFA DOES NOT HAVE REGULATORY OVERSIGHT AUTHORITY OVER UNDERLYING OR SPOT VIRTUAL CURRENCY PRODUCTS OR TRANSACTIONS OR VIRTUAL CURRENCY EXCHANGES, CUSTODIANS OR MARKETS. FX Publications Inc (dba DailyFX) is registered with the Commodities Futures Trading Commission as a Guaranteed Introducing Broker and is a member of the National Futures Association (ID# 0517400). Registered Address: 19 North Sangamon Street, Chicago, IL 60607. FX Publications Inc is a subsidiary of IG US Holdings, Inc (a company registered in Delaware under number 4456365)