EUR/USD Price, Chart, and Analysis
- The US dollar is stuck in a downtrend and heading for 100.
- Euro Area industrial production beats expectations.
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Wednesday’s US inflation data and FOMC minutes have pushed the US dollar lower after headline inflation fell for the ninth month in a row, while the Fed minutes showed growing concern that the US economy would enter a ‘mild recession’ later on this year. The US dollar today touched a new eight-week low and is likely to fall further with little in the way of any near-term support to stem any sell-off.
US Dollar Index Daily Chart – April 13, 2023
The Euro on the other hand continues to push higher, buoyed by hawkish ECB commentary yesterday and stronger-than-expected industrial production today. ECB governing council member Robert Holzmann, a known hawk, continues to push for higher rates, calling for a 50bp hike at the May meeting, and further raises beyond, while also calling for the central bank to accelerate its quantitative tightening program from July.
The Euro Area industrial production report, released earlier today, showed activity picking up strongly in February, beating market expectations. The month-on-month print was the highest since last August.
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The combination of a weaker US dollar and a slightly stronger Euro has helped push EUR/USD back above 1.1000 and back towards the early February, multi-month high at 1.10330. We discussed yesterday the forming of a bullish Cup and Handle pattern on the chart, and this continues to play out. If resistance at this multi-month high is broken convincingly, then 1.11855 will quickly come into view.
EUR/USD Daily Price Chart – April 13, 2023
Chart via TradingView
of clients are net long.
of clients are net short.
Retail Traders Reduce Longs and Increase Shorts
Retail trader data show 29.53% of traders are net-long with the ratio of traders short to long at 2.39 to 1.The number of traders net-long is 19.85% lower than yesterday and 26.93% lower from last week, while the number of traders net-short is 22.11% higher than yesterday and 32.95% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/USD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EUR/USD-bullish contrarian trading bias.
What is your view on the EURO – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.