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Euro Update – EUR/USD Nudging Higher on German Ifo Beat


EUR/USD Price, Chart, and Analysis

  • German Ifo beats expectations.
  • EUR/USD looks reasonably well supported.

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EUR/USD Technical Outlook: Upward Momentum Intact

The latest German Ifo release shows sentiment in Europe’s largest economy ‘brightened considerably’ going into the end of the year. The business climate rose to 88.6 from 86.4 in November, breaking a series of six straight falls in the indicator, while the expectations reading hit 83.2, up from 80.2 in the prior month. On Wednesday the latest German GfK consumer confidence reading will be released (7:00 GMT) and this is also expected to show an improvement on a monthly basis.

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

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How to Trade EUR/USD

The technical outlook for the Euro remains positive and reasonably well-supported. The single currency has appreciated by over 11% against the US dollar since the end of September, printing an unbroken series of higher lows and higher highs along the way. There is a cluster of prior lows on either side of 1.0500 and these should provide near-term support, while the 20-day/200-day moving average changeover highlights the current strength of the trend. Last Thursday’s 1.0736 multi-month high print is the next target for the pair but with market turnover starting to fall ahead of the Christmas break, this high is unlikely to be touched before the year’s end.

EUR/USD Daily Price Chart December 19, 2022

Charts via TradingView

of clients are net long.

of clients are net short.

Change in Longs Shorts OI
Daily 5% 11% 8%
Weekly -2% -3% -3%

Retail trader data show 40.41% of traders are net-long with the ratio of traders short to long at 1.47 to 1.The number of traders net-long is 0.28% lower than yesterday and 5.60% lower from last week, while the number of traders net-short is 7.68% higher than yesterday and 2.50% higher 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. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EUR/USD-bullish contrarian trading bias.

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