Talking Points: US Dollar, USD/CAD, AUD/USD, EUR/USD, Technical Analysis, Retail Trader Positioning Retail traders are increasingly relying on a weakening of the US dollar. USD/CAD upward bets are declining, while AUD/USD and EUR/USD upside bets are rising. For a full IGCS analysis, see the recording of my webcast. Retail traders appear to be increasingly betting that the US Dollar will weaken in the future, according to IG Client Sentiment (IGCS). In the USD/CAD, downside bets are on the rise, while upside bets in the AUD/USD and EUR/USD are on the rise. IGCS might be a contrarian indication at times. That is to say, if the current trend in positioning continues, the Greenback could see further rises in the future. Check out the tape of this week’s IGCS session in the video above to learn more about how to use this tool. Bullish USD/CAD Sentiment Outlook According to the IGCS index, around 57 percent of retail traders are net long USD/CAD. On a daily and weekly basis, upside exposure has fallen by 23.09 percent and 29.49 percent, respectively. The fact that traders are net-long suggests that prices are likely to decline. However, recent shifts in sentiment suggest that the pair’s recent gains may be extended. Analysis of the Technical As it prepares to extend June’s bottom, the USD/CAD is approaching the important 1.2469 – 1.2495 inflection zone. A bullish crossover of the 20-day and 50-day Simple Moving Averages (SMAs) could signal more gains. Negative RSI divergence, on the other hand, indicates that upside momentum is receding. This can sometimes signal the start of a downward trend. Keep a watch on the 200-day SMA, as it might act as key resistance if the market continues to rise. USD/CAD Daily ChartChart created in Trading ViewAUD/USD Sentiment Outlook – BearishUSD/CAD Sentiment Outlook – BearishUSD/CAD Sentiment Outlook – BearishUSD/CAD Sentiment Outlook – According to the IGCS index, around 59 percent of retail traders are net long the AUD/USD. On a daily and weekly basis, downside exposure has decreased by 13.56 percent and 22.82 percent, respectively. The fact that traders are net-long indicates that prices are likely to fall further. This, together with recent movements in mood, suggests a more pessimistic contrarian trade tendency.
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Analysis of the Technical
The AUD/USD attempted to break over the important 0.7532 – 0.7583 resistance level, but prices fell back, leaving a significant upper shadow. The 0.7445-0.7479 zone appears to represent immediate support, with a bearish crossover between the 20-day and 50-day SMAs indicating a near-term downward technical tendency. The pair is also aiming to confirm a decline through the 200-day SMA, which would indicate a significant change in the Australian dollar’s trend. Chart created in Trading View for the AUD/USD pair on a daily basis. Bearish EUR/USD Sentiment Outlook According to the IGCS indicator, approximately 60% of retail traders are net long EUR/USD. On a daily and weekly basis, upside exposure increased by 0.54 percent and 26.07 percent, respectively. The fact that traders are net-long suggests that prices will continue to decrease. Furthermore, recent posture movements are favoring a bearish contrarian trading tendency. Technical AnalysisEUR/USD is seeking to confirm a close below rising support, as well as the important 1.1857 – 1.1836 inflection zone, from June 2020. The March low of 1.1704 has been exposed as a result of this. Positive RSI divergence indicates that bearish momentum is diminishing, which can signal a shift upward in the market. The 20-, 50-, and 200-day SMAs, on the other hand, appear to have a strong bearish technical bias for the pair. Chart created in Trading View for EUR/USD on a daily basis. *Data from the July 7th Report was used to create IG Client Sentiment Charts and Positioning Data—- Daniel Dubrovsky is a strategist for DailyFX.com. Use the comments area below to reach out to Daniel, or follow him on Twitter at @ddubrovskyFX./n
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