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EUR/USD Technical Analysis: Euro Perched at Key Trend Barrier

EUR/USD TECHNICAL ANALYSIS: BEARISH

  • Euro testing key support after upswing is rejected near 1.10 figure
  • Break of support under 1.08 would probably expose March bottom
  • Trader sentiment studies warn a bullish disposition may be firming

The Euro was knocked back lower after a test of resistance near the 1.10 figure, with prices now testing rising trend support limiting the downside for nearly a month. Making the case for lasting weakness probably calls for a move through that to close under the lower bound of the 1.0783-1.0880 zone.

The swing low at 1.0636 might be back in play in that scenario. Alternatively, a rebound that allows EUR/USD to establish a foothold above the 1.0992-1.1009 region could pave the way for another challenge of the March 27 high at 1.1147.

Euro vs US Dollar price chart - daily

EUR/USD daily chart created with TradingView

The four-hour chart offers a sense of more immediate price levels of significance. A preliminary break of rising trend support seems to have played out already but the 1.0848-54 zone is holding back further weakness for now. The 1.0901-25 congestion band marks immediate resistance.

EUR/USD Technical Analysis: Euro Perched at Key Trend Barrier

EUR/USD 4-hour chart created with TradingView

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EUR/USD TRADER SENTIMENT

Retail positioning data shows 55.65% of traders are net-short, with the long-to-short ratio at 1.25 to 1. IG Client Sentiment(IGCS) is typically used as a contrarian indicator, sothe net-short skew in tradersexposure suggests that EUR/USD is biased upward.

In fact, the net-short tilt appears to be growing. Just over 10 percent more traders are betting on Euro weakness today than yesterday. Their ranks are up 33.16 percent relative to a week ago. That seemingly makes for a strengthening sentiment-based bullish trading bias.

Euro vs US Dollar price, trader sentiment

See the full IGCS sentiment report here.

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EUR/USD TRADING RESOURCES

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter