FxWirePro: Retail sentiment adds bullish bias to euro ahead of FOMC

Though economic and political fundamentals remain negative for the Eurozone, the euro could move a bit higher,

• Weaker than expected economic number, especially from European economic powerhouse Germany along with Brexit uncertainty remains a major concern.
• However, the euro has already risen almost 200 pips since it tested key channel support around 1.129 area early March.
• The euro is currently trading at 1.135 against the USD and further rise possible.  
• But, more importantly, the recent comments from several governing council members suggest that the European Central Bank (ECB) gradually turning more dovish.
• We would also like to warn that channel resistance is hovering around 1.139 area. We do not believe that now is the time to enter fresh long positions with FOMC looming ahead.

Retail sentiment suggests otherwise,

Retail sentiment:

• The sentiment reports from IG Markets, which is a UK-based company providing trading in financial derivatives such as contracts for difference and financial spread betting, strongly suggest that the euro is set to rise further.
• IG markets’ retail positions data provide a glimpse to retail traders’ positions, which are largely used a contrarian indicator since retail positioning moves in opposite direction to market movements.
• As of today, retail position remains skewed to the downside; 62 percent of retail positions are on the short side, while only 38 percent are long on euro, suggesting further slide.