EUR/USD is referred to as ‘euro-dollar’ because it’s the pairing of the euro – the currency of 19 European countries – and the US dollar. EUR is the currency code for the euro and USD is the currency code for the US dollar. For more info on how we might use your data, see xtb review our privacy notice and access policy and privacy webpage. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use.
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- Additionally, severe tariffs and immigration policies in the US are expected to have a more stagflationary effect on the US economy compared to the rest of the world.
- The euro has demonstrated exceptional performance, appreciating 5.5% against the US dollar in the previous month.
- Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa.The ECB Governing Council makes monetary policy decisions at meetings held eight times a year.
- However, considering the steep year-to-date appreciation, a consolidation phase may precede further advances.
- Share dealing and IG Smart Portfolio accounts provided by IG Trading and Investments Ltd, CFD accounts and US options and futures accounts are provided by IG Markets Ltd, spread betting provided by IG Index Ltd.
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US stocks mount challenge to European dominance
Commercial traders are often seen as having a longer-term view and deep understanding of the underlying markets. A high ratio indicates they are net long (expecting the price to rise), while a low ratio suggests a net short position (expecting the price to fall). The ratio has shown significant fluctuations over time, indicating shifts in commercial traders’ positioning in the Euro. The current ratio of around 0.77 suggests that, on balance, commercial traders are positioned slightly bearishly on the Euro. Exposure to the upside declined by roughly 15% and 18% over a daily and weekly basis respectively. From here, the combination of current sentiment and recent changes offers a stronger bullish contrarian trading bias in EUR/USD.
This chart layers on a simple moving average (SMA) and a DIFF CD oscillator to the EUR/USD price action. Moving averages help smooth out price fluctuations and identify the prevailing trend, while oscillators provide insights into the momentum and potential turning points in the market. The Z-Score is also present, offering further context on how extended the price is.
IG Client Sentiment Report: GBP/USD, AUD/USD Reveal a Common Flaw
If you do not agree with these terms, refrain from relying on the information and opinions presented in external sources. The 100-day and 200-day Simple Moving Averages, along with the 50-day Exponential Moving Average and 50-day Simple Moving Average, all align with the buy sentiment, reinforcing the underlying uptrend. However, the 20-day Simple Moving Average remains a headwind, suggesting that the path higher may still face resistance.
- Additionally, recent consumer price index (CPI) data indicates a 0.9% increase in the first quarter of 2025, up from the previous quarter’s 0.2%.
- Other than that, Asian and European indexes maintained the positive tone triggered by news that the US and China began de-escalating the trade war, by reducing massive tariffs for 90 days.
- The sentiment indicator at the bottom aligns with the recent upward price action, showing a prevailing bullish sentiment in the market.
- Since then, that increased to around a 45% upside bias towards the end of the month.
- The euro may be readying to push higher against the US dollar based on recent signals from IG Client Sentiment (IGCS).
This chart offers a fascinating glimpse into the collective mindset of traders involved with the US Dollar Index. Rather than showing the price itself, it tracks the net long or short positions held by these traders over time, providing valuable insights into prevailing market sentiment. Simply put, retail traders contribute only a certain percentage of market input so naturally other factors will have influence on the respective market.
Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency.A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall.Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy. The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The hitbtc crypto exchange review ECB sets interest rates and manages monetary policy.The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa.The ECB Governing Council makes monetary policy decisions at meetings held eight times a year.
From a technical perspective, the pair presents a mixed but generally positive outlook. The Relative Strength Index (RSI) sits in the 40s, indicating balanced momentum without immediate overbought conditions. The Moving Average Convergence Divergence (MACD), however, continues to flash a sell signal, hinting at potential short-term resistance. Meanwhile, the Bull Bear Power indicator supports the buy bias, adding weight to the bullish case. The Ultimate Oscillator also holds in the 40s, reflecting a cautious tone, while the Stochastic %K, trading near 16, flashes a clear buy signal, indicating potential for further gains.
These include the RSI indicator strategy, momentum indicator strategy and breakout trading strategy. When trading euro-dollar, you should watch out for economic reports, political events and monetary policies that move the price of EUR/USD. Recurring events such as European Central Bank (ECB) and Federal Reserve Bank announcements, as well as developments concerning Brexit and US-China trade discussions impact the price of euro-dollar. Get The Week Ahead, our free rundown of the coming week’s market-moving events and forex pairs to watch, delivered to your inbox every Sunday. The value of shares and ETFs bought through an IG stock trading account can fall as well as rise, which could mean getting back less than you originally put in. Please ensure you fully understand the risks and take care to manage your exposure.
At the beginning of September, IGCS implied that about 35% of retail investors were net long EUR/USD. Since then, that increased to around a 45% upside bias towards the end of the month. Additionally, severe tariffs and immigration policies in the US are expected to have a more stagflationary effect on the US economy compared to the rest of the world. This is prompting global investors to reduce their decades-old overweight positions in US stock markets in favour of European and Chinese indices. Technical analysis indicates AUD/USD at a pivotal juncture as it attempts to breach its horizontal consolidation range and establish position above the 200-day moving average (SMA).
Use this to see how IG client accounts with positions on this market are trading other markets. Data is calculated to the nearest 1%, and updated automatically every 15 minutes. The Australian dollar encountered considerable downward pressure in early April amid tariff-induced market volatility. Given China’s position as Australia’s predominant trading partner, Chinese economic conditions significantly influence AUD trajectories. Substantive progress in US-China trade negotiations could catalyse further AUD/USD appreciation. Additionally, recent consumer price index (CPI) data indicates a 0.9% increase in the first quarter of 2025, up from the previous quarter’s 0.2%.
Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you’re a beginner or an expert, find the right partner to navigate the dynamic Forex market. Stay on top of upcoming market-moving events with our customisable economic calendar. IG International Limited is part of the IG Group and its ultimate parent company is IG Group Holdings Plc.