Euro (EUR) Forecast – EUR/USD Bearish Trend Remains in Full Control

EUR/USD Price, Chart and Analysis

• Fundamentals and technicals look weak.
• The next ECB policy meeting is over a month away.

The ECB raised its three key rates by 75 basis points at the September 8 central bank meeting, which stabilized the single currency in the short term, but with a host of other central banks rising aggressively. since then, including the Federal Reserve, the Euro is under pressure again.

Inflation in the eurozone remains excessively high as growth slumps and interest rates need to be raised, according to ECB executive board member Isabel Schnabel. This acknowledgment of the economic situation of the single bloc, held by many, will likely mean that the ECB will consider another 75 basis point hike at its next meeting in October. The problem is that this meeting is at the end of the month, October 27, and that leaves the single currency at the mercy of the market for another month, and the markets are not kind to the euro at the moment. Belligerent rhetoric from ECB members won’t be enough to defend the Euro against a creeping US Dollar, and with little solid support on the charts, the pair has only one way forward.

Next week, a few important German economic releases should be watched closely. The IFO Business Climate and GfK Consumer Confidence releases are set to fall further, adding pressure to the single currency, while September’s preliminary inflation release could see price pressures build. a new multi-decade high.

For all economic news and events affecting the market, see the DailyFX Calendar

The monthly EUR/USD chart highlights the unidirectional nature of the pair since June 2021, when a high of 1.2280 was recorded. The important support at 1.0340 was broken easily this time around, while the parity (1.0000) offered short-term support but eventually succumbed. A small cluster of former lows around the 0.9600 area may offer some semblance of support, but with the pair stuck in a strong downtrend, any support may prove fleeting. The September high of 1.0200 is unlikely to be tested in the short to medium term.

EUR/USD monthly price chart September 23, 2022

Retail trader data shows 74.31% of traders are net long with a traders long to short ratio of 2.89 to 1. Traders net-short is 9.90% higher than yesterday and 35.05% lower than last week.

We generally take a contrarian view of crowd sentiment, and the fact that traders are net buyers suggests that EUR/USD prices may continue to decline. Positioning is less net-long than yesterday but net-long since last week. The combination of current sentiment and recent changes gives us another mixed EUR/USD trading bias.

What is your opinion on the EURO – bullish or bearish?? You can let us know via the form at the end of this article or you can contact the author via Twitter @nickcawley1.