- EUR/USD – short-term weakness persists.
- EUR/GBP – Sterling rattled by politics.
- EUR/CAD – Bank of Canada on tap.
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The short-term weakness in EUR/USD continues with the pair looking set to print a seventh lower high in on a row on the daily chart – excluding the Sunday candle – a negative set-up. Today’s price action has failed to post another lower low as we write which may temper any further downside, but the pair needs to break above the short-term simple moving average if further losses are to be stemmed. The 20-day sma (red line) is currently under pressure and a break and close above this moving average could see the pair eye 1.1386 as a target. If weakness continues, then there is little in the way of support before 1.1200 and the November 24 18-month low at 1.1185 comes into play.
EUR/USD Daily Price Chart December 8, 2021
Retail trader data show63.33% of traders are net-long with the ratio of traders long to short at 1.73 to 1. The number of traders net-long is 4.24% lower than yesterday and 2.33% higher from last week, while the number of traders net-short is 3.23% higher than yesterday and 11.91% higher from last week. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/USD prices may continue to fall.
Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current EUR/USD price trend may soon reverse higher despite the fact traders remain net-long.
The UK government is coming under increasing pressure to reveal if they had a Christmas Party last year, breaking a government-imposed lockdown order which banned households from mixing indoors. The subsequent release of a video showing senior government officials joking about this ‘fictional party’ has ramped up pressure on UK PM Boris Johnson to come clean about what actually happened and the jovial response by some of his senior aides. This situation is set to run and it will increase pressure on the PM to act. Added to this, there are rumors circulating that government may re-introduce working from home measures and covid passports for large venues in the very near future, adding pressure on the British Pound.
The daily EUR/GBP chart shows the Euro outperforming Sterling over the last two weeks after a cluster of lows just below 0.8400 held in mid-to-late November. A longer-term view of the pair shows that a series of lower highs and lower lows remain in place with a print above 0.8591 needed to break this trend. The 200-day sma, currently at 0.8553 is capping further upside at the moment.
EUR/GBP Daily Price Chart December 8, 2021
EUR/CAD traders will be waiting for the 15:00 GMT release of the latest Bank of Canada monetary policy decision to see if the central bank will change the timing for the first of their expected four rate hikes next year. The economic back remains strong – see story below – but the increasing spread of covid-19 may see the BoC adopt a slightly less aggressive stance, leaving the Canadian dollar at risk in the short term.
The weekly EUR/CAD chart shows the pair around 100 pips away from making a fresh three-and-a-half-year low. The longer-term outlook remains negative with a ‘death cross’ (50-dma trading through the 200-dma) formation in mid-September sparking a heavy sell-off.
EUR/CAD Weekly Price Chart December 8, 2021
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.