EUR/USD price, chart and analysis
- EUR/USD is looking at the end of May.
- The US dollar appears to be oversold but further losses are possible.
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The greenback weakness seen in the US dollar against various US pairs remains in the doldrums. Financial markets are continuing to discount expectations of a US rate hike, keeping US bond yields low and the greenback on the back. While various members of the Federal Reserve continue to talk about a terminal rate above 5 percent and no rate cut in 2023, financial markets are pricing in a higher Fed rate of 4.75% – 5.0% in November and a possible 25 basis point cut at December meetings.
While the US dollar remains under pressure from low inflation, the euro continues to strengthen under pressure from the ECB to keep rates higher to dampen continued inflationary pressures. Influential ECB board member Isabelle Schnabel recently told the International Symposium on Central Bank Independence that the ECB remains in a high-speed cycle and still needs to raise rates ‘significantly’. With the Fed ending its rate-hiking cycle, and the ECB still in full swing, the price differential between the two will continue to give the euro strength.
The daily EUR/USD chart shows the pair standing at a new multi-month high after rallying around 250 pips over the past two days. EUR/USD is now finally at an early June 2022 high and looks very good to test the May 30 high at 1.07870. Above this 1.09370 comes into view. Using the two-month high CCI indicator, the pair appears overbought.
EUR/USD Daily Rate Chart – January 10, 2023
Charts via TradingView
They are customers. Net long.
They are customers. Net short.
Retailers increase net short positions
Retail traders data shows that 30.40% of traders are net-long, with a ratio of short to long traders of 2.29 to 1. The number of traders is 2.02% lower than yesterday and 25.16% lower than last week, while net-short traders are 13.91% higher than yesterday and higher than last week. It is 28.37% higher.
We usually take a contrarian view on public sentiment, and the fact that traders are net-short suggests that the EUR/USD price may continue to rise. Traders are shorter than yesterday and last week, and it gives us a combination of current sentiment and recent changes Strong EUR/USD-bullish trade bias.
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