Will Heavyweight Data Breathe Life Back Into a Lethargic EUR/USD?

EUR/USD Price, Chart, and Analysis

• Heavyweight Euro, German, and US data releases are set for next week.
• Fed speaker blackout period ahead of the May 3rd FOMC rate decision.
• EUR/USD traders hoping for some tradable action.

It’s been a tough week for EUR/USD traders with the market kept in check by Monday’s 90-pip range. A lack of fundamental drivers has not helped and with little in way of data today the week looks like closing out fairly close to where it opened on Monday. The US dollar has been kept in check and basically traded sideways all week despite hawkish Fed speak threatening to push the greenback higher. Federal board members enter a blackout period from Monday next week ahead of the FOMC meeting on May 3rd. The latest CME Fed Fund probabilities point to one more 25 basis point hike before the central bank stands pat for three meetings. At the start of Q4, the Federal Reserve is expected to start cutting interest rates.

USD Price Forecast: Dollar Index (DXY) Bid on Fed Speak

Euro traders will likely see more action and volatility next week with the release of a number of high-importance data reports. German economic data is to the fore next week, while EUR/USD traders will also need to be aware of a handful of US releases including the US Core PCE report for the latest look at US price pressures. Next Friday’s calendar is jam-packed with potential market-moving events. In addition to the economic data, the earnings season gets into full flow with some heavyweight US companies reporting their latest numbers. While these alone may not move the dial too much, they have the ability to shift sentiment and, again, should be watched closely.

For all market-moving events and economic data releases, see the real-time DailyFX Calendar

A look at the daily chart shows a constrictive range this week of less than one big figure in EUR/USD. While this may keep traders away from the pair, a break of either this week’s low (1.0909) or high (1.0999) may spark a little more follow-through. The 14-day ATR, at the bottom of the chart, shows volatility at a two-month low. Again, if this tight range breaks, volatility may jump as traders look for the next levels of support and resistance. EUR/USD is too important a trading pair to stay too quiet for too long.

EUR/USD Daily Price Chart – April 21, 2023

Chart via TradingView

Retail Traders Reduce Longs and Increase Shorts

Retail trader data show 43.55% of traders are net-long with the ratio of traders short to long at 1.30 to 1.The number of traders net-long is 3.24% lower than yesterday and 46.51% higher from last week, while the number of traders net-short is 0.64% higher than yesterday and 25.20% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/USD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EUR/USD trading bias.

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.