FxWirePro: Euro likely to gain against USD as retail sentiment flips

Euro likely to gain,

• The ongoing trade dispute with the United States could weigh on the U.S. dollar. Last Friday, in response to China’s attempt to renegotiate parts of the agreed deal, the U.S. administration hiked tariffs on $200 billion worth of Chinese goods from 10 percent and 25 percent, and after talks with Chinese representatives led by Chinese Vice-premier Liu He over the weekend, U.S. trade representative Robert Lighthizer announced that President Trump has given the green light to start the process of imposing tariffs on rest of the Chinese imports worth $300 billion. The U.S. has currently imposed 25 percent tariffs on $250 billion worth of goods.
• China has responded to the latest actions by announcing tariffs on $60 billion worth of goods effective from June 1st.

Amid these tensions, the retail sentiment has flipped in EUR/USD suggesting upside in the single currency.

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, points to bullish bias in the EUR/USD.
• IG markets’ retail positions data provide a glimpse to retail traders’ positions, which are largely used as a contrarian indicator since retail positioning moves in the opposite direction to market movements.
• As of today, according to data from IG markets, sentiment once again flipped to the bullish side.  Today, the report suggests that 48 percent of the retail positions are on the buy side in EUR/USD, while 52 percent are bearish. That gives the pair a bullish bias.

The euro s currently trading at 1.124 against the USD, and the next target lies around 1.129-1.13 area.