EUR/USD Latest – Ranging Ahead of Next Week’s US Data and FOMC Minutes

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EUR/USD PRICE, CHART, AND ANALYSIS

• US data and FOMC minutes next week will drive EUR/USD.
• Massive build of weekly trader EUR/USD net-short positions.

Next week’s economic calendar is packed full of high importance US data and events which will add an extra dose of volatility to the US dollar. Wednesday’s FOMC minutes will give the market a clearer understanding of various members’ thoughts on the current state of the US economy and the path of future rate hikes, just one day before the first look at US Q2 GDP. On Thursday, the Fed’s preferred inflation reading PCE will highlight the growing pressures in the US. All of these events/releases are likely to add extra volatility to USD pairs.

For all market-moving economic releases and events, see the DailyFX Calendar

 

The US dollar (DXY) is consolidating its recent rally that saw the USD touch levels last seen in December 2002. With a lot of the expected US rate hikes already baked into the greenback, an extra driver/s will be needed if fresh highs are to be made. The downside for the DXY looks limited with 102.25 as the first point of support. Below here 100.94 comes into play.

US DOLLAR (DXY) DAILY PRICE CHART MAY 20, 2022

The daily EUR/USD chart shows the pair nearing a cluster of prior tops all the way up to 1.0655 and these are unlikely to be broken convincingly ahead of next week’s US data releases. The 106.36 level is a double bottom made in mid-March 2020 that sparked a rally all the way to the January 4, 2021 high of 1.2334. Volatility in EUR/USD is high, using the 14-day ATR, while the CCI indicator suggests that the market is entering overbought territory.

EUR/USD DAILY PRICE CHART – MAY 20, 2022

Retail trader data show 65.68% of traders are net-long with the ratio of traders long to short at 1.91 to 1. The number of traders net-long is 7.34% lower than yesterday and 18.00% lower from last week, while the number of traders net-short is 9.08% higher than yesterday and 46.27% higher from 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.

What is your view on the EURO – bullish or bearish?

 

May 20, 2022 |  DailyFX
Nick Cawley, Strategist