According to Ukrainian officials, Russia has fired 75 missiles in the latest round of attacks, targeting major cities in Ukraine. According to General Valerii Zaluzhnyi, via the BBC, 41 of the 75 missiles fired were neutralized, and the rest hit cities including Kyiv, Dnipro, and Kharkiv with infrastructure sites targeted. The latest ratcheting up of hostilities by Russia has driven investors into safe haven US dollars again, pushing the greenback back towards its recent two-decade high.

With little in the way of headline economic data due from the Euro Area this week, the outlook for the single currency will likely be shaped by US data releases over the next few days. The main US data reports start later in the week with the headline release of the September inflation data on Thursday.

I highlighted last week that parity was expected to hold as resistance and this remains the case. As a pair, EUR/USD is moving lower on the best/worst of both worlds with the US dollar remaining firmly bid while the Euro is seemingly on a one-way track lower.

The daily EUR/USD chart highlights last week’s sharp reversal when the pair hit parity. The more this level is tested and holds, the stronger it becomes and the harder it will be to break down. The initial target for EUR/USD is now the two-decade low at 0.9536. A print below here would make a fresh lower low, another negative signal, while the series of lower highs remain intact. With little in the way of any fundamental or technical reason to buy EUR/USD at the current time, any move higher will likely be short-lived and retraced quickly.
 

EUR/USD Daily Price Chart

(Click on image to enlarge)

Retail trader data show that 59.08% of traders are net-long with the ratio of traders long to short at 1.44 to 1.The number of traders net-long is 0.18% higher than yesterday and 4.91% higher from last week, while the number of traders net-short is 6.73% higher than yesterday and 7.54% 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.

What is your view on the EURO – bullish or bearish?

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