FxWirePro: Retail sentiment points to further downside in euro

The single currency is likely to face further slide,

• At least retail sentiment is pointing in that direction.
• The euro has already declined around 250 pips since it tested key resistance around 1.15 area on 31st January.
• The euro is currently trading at 1.127 against the USD and further pain could be in store for the pound.
• Weaker than expected economic number, especially from European economic powerhouse Germany along with Brexit uncertainty spooked the single currency.

Retail sentiment:

• 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, strongly suggest that the euro is set to decline further.
• IG markets’ retail positions data provide a glimpse to retail traders’ positions, which are largely used a contrarian indicator since retail positioning moves in opposite direction to market movements.
• As of today, the retail positions remain skewed to the upside. 71 percent of retail positions are on the long side, while only 29 percent are short on euro, suggesting further slide.