FxWirePro: EUR/USD likely to rise in short-term as retail sentiment flips

Euro defying gravity, but does it have the escape velocity to move higher -

• The retail sentiment is suggesting that it does and the pair is likely to move higher. Broad-Based weakness in the USD stemming from speculation over rate cut by the U.S. Federal Reserve later in the month and the European Central Bank (ECB) which once again resisted dovish actions at yesterday’s meeting is fueling the rally in EUR/USD.
• At yesterday’s policy meeting, the ECB signaled that t stands ready to act if necessary by further easing but fell short of promising further stimulus.

Retail sentiment:

• The retail sentiment flipped yesterday to net short on EUR/USD.
• The sentiment reports from IG Markets, which is a UK-based company providing trading in financial derivatives such as contracts for difference and financial spread betting, points to bullish bias in the EUR/USD.
• IG markets’ retail positions data provide a glimpse to retail traders’ positions, which are largely used as a contrarian indicator since retail positioning moves in the opposite direction to market movements.

• As of today, according to data from IG markets, sentiment has flipped to the bullish side.  Today, the report suggests that 54 percent of the retail positions are on the sell side in EUR/USD, while 46 percent are bullish. That gives the pair a bullish bias.

Trade idea:

Calculations suggest that EUR/USD would retest 1.14 area in the short run.