Jump to content

Euro Forecast: EUR/USD, EUR/JPY, EUR/GBP Short Bets Rise. Will Gains Follow?


Recommended Posts

EURO, EUR/USD, EUR/JPY, EUR/GBP, TECHNICAL ANALYSIS, RETAIL TRADER POSITIONING - TALKING POINTS

  • Retail traders are increasingly betting that the Euro may weaken ahead
  • Is this a sign that EUR/USD, EUR/JPY & EUR/GBP may climb instead?
  • What are key technical levels to watch for should net-short bets increase?
EUR/USD Price Forecast - Euro Breaks Down through 50 Day EMA

Glancing at IG Client Sentiment (IGCS), retail investors are increasingly betting that the Euro may weaken against the US Dollar, Japanese Yen and British Pound. As a result, net-long exposure in EUR/USD, EUR/JPY and EUR/GBP are on the decline. IGCS can often function as a contrarian indicator. If this trend in positioning continues, the Euro could advance in the coming days.

EUR/USD SENTIMENT OUTLOOK - BULLISH

The IGCS gauge shows that about 52% of retail traders are net-long EUR/USD. Since the majority of investors are net-long, this suggests prices may continue falling. However, downside exposure has increased by 19.71% and 40.87% compared to yesterday and last week respectively. The combination of overall and recent changes in positioning hint that prices may reverse higher.

Euro Forecast: EUR/USD, EUR/JPY, EUR/GBP Short Bets Rise. Will Gains Follow?

TECHNICAL ANALYSIS

EUR/USD continues to consolidate within the boundaries of an Ascending Triangle chart formation. The direction of the breakout could hint at the coming trend. For now, a falling trendline from June is nearing. The latter could reinstate the dominant downtrend since last year. Otherwise, taking out the trendline exposes the 1.1525 inflection point. Closing under triangle support exposes the 1.1169 – 1.1195 range.

 

EUR/USD DAILY CHART

Euro Forecast: EUR/USD, EUR/JPY, EUR/GBP Short Bets Rise. Will Gains Follow?

Chart Created in Trading View

EUR/JPY SENTIMENT OUTLOOK - BULLISH

The IGCS gauge shows that roughly 30% of retail traders are net-long EUR/JPY. Since the majority of investors are net-short, this suggests prices may continue rising. This is as downside exposure increased by 23.28% and 22.22% compared to yesterday and last week respectively. With that in mind, the combination of overall and recent changes in positioning offers a bullish-contrarian trading bias.

Euro Forecast: EUR/USD, EUR/JPY, EUR/GBP Short Bets Rise. Will Gains Follow?

TECHNICAL ANALYSIS

Despite recent consolidation, EUR/JPY remains in a near-term uptrend since December. Zooming further out, the pair has been ranging since May 2021. Clearing immediate resistance, which appears to be the 61.8% Fibonacci retracement at 131.471, exposes the 78.6% level at 132.638. Turning lower places the focus on the 20-day Simple Moving Average, which may reinstate the uptrend.

 

EUR/JPY DAILY CHART

Euro Forecast: EUR/USD, EUR/JPY, EUR/GBP Short Bets Rise. Will Gains Follow?

Chart Created in Trading View

EUR/GBP SENTIMENT OUTLOOK - BULLISH

The IGCS gauge shows that about 76% of retail traders are net-long EUR/GBP. Since the majority of investors are still biased to the upside, this could hint at further losses. However, downside exposure has increased by 20.27% and 40.53% compared to yesterday and last week respectively. With that in mind, the combination of overall and recent changes in positioning hint EUR/GBP may climb from here.

Euro Forecast: EUR/USD, EUR/JPY, EUR/GBP Short Bets Rise. Will Gains Follow?

TECHNICAL ANALYSIS

Following persistent losses since September 2020, EUR/GBP has now finally declined to the upper boundary of the 0.8282 – 0.8339 support zone. This range is made up of lows achieved in 2020. As such, the pair may bounce off this zone, placing the focus on the 38.2% Fibonacci extension at 0.8430. On the other hand, clearing the support zone exposes the 61.8% extension at 0.8251.

EUR/GBP DAILY CHART

Euro Forecast: EUR/USD, EUR/JPY, EUR/GBP Short Bets Rise. Will Gains Follow?

Chart Created in Trading View

*IG Client Sentiment Charts and Positioning Data Used from January 11th Report

Written by Daniel Dubrovsky, Strategist for DailyFX.com. 12th Jan 2022.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      19,988
    • Total Posts
      87,948
    • Total Members
      69,138
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    waynemax
    Joined 25/09/22 10:27
  • Posts

    • Hey @pravid17 I hope you're well.  In the leveraged trading industry there are brokers who don't hedge client's exposure and brokers (like ourselves) who do hedge client's exposure.  In a perfect world the exposure of short clients would net off the trades of long clients however this is not always the case. Our hedging model allows us to take an exposure in the underlying market for the remaining exposure which doesn't offset - This way we don't need to hedge every trade, worry about profits of our clients and results in lower costs for hedging in the underlying market (commissions, interest etc.). So say 60% of IG customer exposure in the ASX was long and 40% of exposure on the ASX was short. The 40% would net each other off but there's a remaining 20% of customers who need to be hedged to cover their positions. We go into the market and hedge this.  We make our money primarily through our spreads and overnight funding  with other fees making up a small proportion of our revenue. I would like to remind also that IG is regulated by several bodies globally, including top-tier regulators like the UK's FCA, Germany's BaFIN, Australia's ASIC - This should be quite reassuring from a dealing execution and transparency perspective.  I hope this helps, let me know if you have any other question 
    • A survey from Reviews.org, which featured 1000 Americans, found that as many as 1 in 4 US subscribers may quit the service in the next year.    Jeremy Naylor | Writer, London | Publication date: Friday 23 September 2022  There was an interesting breakdown, but the main reason was affordability. Only 18% said they would move to a cheaper competitor. IGTV’s Jeremy Naylor looks at the numbers. Netflix subscription woes Netflix Inc (All Sessions) could be in for a rough time ahead over the next 12 months if a new survey is anything to go by, which was conducted in the US. Out of the 1,000 adults that took part in this survey undertaken by Reviews.org, around 25% of those that were covered said that they would be cancelling their Netflix subscription within the next 12 months. Now, it says with that 25% of US subscribers to Netflix considering leaving, not to join a competitor, but mostly because of pressures on household bills. This is how it is split: rising cost of subscriptions - 40% inflation - 20% a lack of content - 22% spending more time on the services of others - 18% So you can see, a minority said they were going to other services, such as those provided by Disney Plus or Amazon Prime. The cost of Netflix has risen dramatically this year as its basic plan increased by 11% in January and its other plans by 20% to 25%. Now these were the first price increases for three years, so that itself is relatively new for a lot of subscribers. Netflix share price Let's take a look at the Netflix share price. You can see on the far left hand side of this chart the COVID lows at $290.39. We saw a whacking great increase there of 141% to the top and the record high in Netflix shares back in November 2021. And that was when subscriptions were rising, people were paying more for their services, and it was all humming beautifully. And then all of a sudden people started questioning the numbers of streaming services they were undertaking with some deciding to withdraw from Netflix. All of a sudden the big drops started coming through with profit warnings and sales warnings. We've recently hit a new low of $162.50. Since then there has been a little bit of an increase. We're currently trading at $232.75, but we are down by a margin of 1.75% in today's session, which reflects this news that we could well see a relatively large drop in subscribers for Netflix in the US within the next 12 months.
    • Market data to trade the week of 26 September: Nasdaq; NXT From the economic calendar next week IG technical analyst, Axel Rudolph, picks up on a short trade on the Nasdaq around US inflation data. Meanwhile, despite another light week of corporate data, Axel picks out the chart of Next plc (NXT) as an interesting trade to think about.          
×
×
  • Create New...