The Speculative Sentiment Index (SSI) on the EUR/USD currency pair currently shows 59% short sell positions at this time. The Euro is trending bearish against the dollar, as strong US fundamentals and an uptick in major averages of late have boosted sentiment for the greenback. At present levels, the S1 for the pair is 1.1094, S2 is 1.0919 and S3 is 1.0777. R1 is at 1.1201, R2 is at 1.1376 and R3 is at 1.1495. The currency pair is moving above the technical resistance level, but we are not seeing sufficient volume trading to warrant a breakout at that level. As the value of the EUR decreases in the pair, volume is decreasing too. There remains a great degree of vulnerability, especially to the downside for this currency pair.
There has been a dramatic shift in FX trader positions over the past week. It appears that the Euro will move in a flat or limited trading range against the USD. Just recently, the greenback was losing ground against the Euro. A reversal in the currency pair has taken place lately and the USD has strengthened against the Euro and that is why we are seeing strong bearish sentiment with this pair. Retail traders have since backpedaled and there is now significant weakness evident with the EUR/USD pair. As a case in point, long interest has spiked 19%, and the overall net long position may come as somewhat of a surprise to traders, but it is evident nonetheless. The pair is trading sideways for now and will likely continue doing so for several days.
Factors Impacting on the EUR/USD Pair
Towards the end of last week, economic analysts were poring over the data coming out of the US and elsewhere. The EUR/USD currency pair seems divorced from the activities of the global economic markets, given that oil prices recovered strongly in recent days. The price of WTI crude oil is now $29.64 per barrel on the Nymex. It began a precipitous slide from over $32 per barrel right down to $26 per barrel – hitting a 12-year low and then rebounding towards the $30 per barrel support level. Brent crude oil has likewise been on a rollercoaster ride of late in February and is now trading at $33.17 per barrel after several negative sessions. The currency pair is heavily impacted by crude oil prices. Additionally, the Federal Reserve Bank FOMC Minutes revealed that the situation in the US is a lot more dire than previously anticipated. The possibility of hiking interest rates at this time appears to be a nonstarter, so any interest-rate hikes will likely be moved from March to June or later in 2016.
