Euro, EUR/USD, IGCS – Technical Outlook
- Euro continues to consolidate, but the broader downtrend remains intact
- On the 4-hour chart, EUR/USD seems to be establishing a key trendline
- IG Client Sentiment shows rising EUR/USD short bets, hinting reversal
Euro Technical Analysis
The Euro remains in a consolidative setting against the US Dollar since noting downtrend exhaustion warnings in last week’s coverage. While this is a primarily technical briefing, it should be noted that the single currency remains vulnerable to ongoing geopolitical developments around Ukraine. The Federal Reserve interest rate decision is also due later this week.
From a technical standpoint, the Euro appeared to find support just above lows from April 2020 (1.072 – 1.0793) last week. While the broader downtrend remains intact, prices were also unable to find much meaningful upside progress over the past 5 trading sessions. Key resistance appears to be the former (1.1186 – 1.1122) support zone, with the 50-day Simple Moving Average above.
EUR/USD Daily Chart
EUR/USD 4-Hour Chart
On the 4-hour setting below, EUR/USD appears to be carving out a near-term rising trendline from earlier this month. This is as the 50-period SMA has been acting as resistance, maintaining a downside focus. A confirmatory push above the SMA would expose both the 100-period line as well as 1.1095 resistance. Clearing the latter may open the door to extending gains towards a falling trendline from May 2021. Otherwise, clearing 1.0804 exposes lows from 2020.
Euro IG Client Sentiment Analysis – Bullish
Looking at IG Client Sentiment (IGCS), about 63% of retail traders are net-long EUR/USD. IGCS tends to function as a contrarian indicator. Since most traders remain biased to the upside, this suggests prices may keep falling. However, downside exposure has increased by 14.4% and 11.26% compared to yesterday and last week respectively. With that in mind, the combination of overall and recent shifts in positioning hint that EUR/USD may soon reverse higher.
*IGCS data used from March 14th report
— Written by Daniel Dubrovsky, Strategist for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
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Originally Posted on: https://www.dailyfx.com/forex/technical/home/analysis/eur-usd/2022/03/15/Euro-Technical-Outlook-EURUSD-Downtrend-Holds-as-Key-Support-Levels-Reinforced.html
By: Daniel Dubrovsky