EUR/USD Eyes One-Month High, SURE Bonds Garner Huge Demand

EUR/USD Price, News and Analysis:

  • US weakness helping push EUR/USD higher.
  • European Union bond sale draws huge demand.
  • IG trader sentiment shows a bullish bias.

Investors flocked to the inaugural SURE bond sale today, demand in excess of 10-times the amount of bonds for sale. The European Union Support to mitigate Unemployment Risks in an Emergency bonds, the EU’s first joint debt scheme, drew demand of over EUR233 billion for the EUR17 billion on bonds on sale. The 10-year attracted EUR145 billion demand for the EUR10 billion on offer, while the 20-year bond drew orders of EUR88 billion, according to a report by Reuters, citing lead managers of the deal.

What Are SURE Bonds? – European Commission Primer

The US dollar basket (DXY) continues to weaken and is approaching a one-month support level around 93.00 which needs to be closely watched. The ongoing row in the Senate over the coronavirus stimulus bill is running into an October 20 deadline imposed by House Speaker Nancy Pelosi and the near-term future of the US dollar will be dictated by today’s outcome.

US Dollar Basket (DXY) Daily Price Chart (March – October 20, 2020)

EUR/USD Eyes One-Month High, SURE Bonds Garner Huge Demand

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EUR/USD is now setting up for a run at the October 9 multi-week high at 1.1832, continuing the pair’s strong start to the week. The 20-day sma remains supportive, while today’s break above the 50-day sma needs to be confirmed to continue the bullish sentiment. Above here a cluster of old highs should slow down progress back to 1.19175. Initial support from the 20-day sma around 1.1750 ahead of the 1.1682 – 1.1700 zone.

EUR/USD Daily Price Chart (February – October 20, 2020)

EUR/USD Eyes One-Month High, SURE Bonds Garner Huge Demand

of clients are net long.

of clients are net short.

Change in Longs Shorts OI
Daily 0% 14% 9%
Weekly -10% 6% 0%

IG Retail trader datashow33.51% of traders are net-long with the ratio of traders short to long at 1.98 to 1. The number of traders net-long is 11.96% lower than yesterday and 10.88% lower from last week, while the number of traders net-short is 14.17% higher than yesterday and 3.98% 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

What is your view on EUR/USD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

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