- Strong euro area growth and inflation data helped support the recent strength of the euro area.
- Retailers are cutting long positions, increasing shorts.
Looking at the data for the second quarter of the first quarter, the euro area economy grew by 2.0%, exceeding analysts’ expectations for a 1.5% increase. Among the Member States, Portugal rose the most (4.9%), followed by Austria (4.3%) and Latvia (3.7%). The largest member of the bloc, Germany, grew by 1.5%, falling short of forecasters’ expectations by 2.0%.
Annual euro area inflation rose by 2.2%, from 1.9% in June, boosted by a 14.1% rise in energy prices, while food, alcohol and tobacco prices rose by 1.6%. The euro area unemployment rate fell to 7.7%.
For all market-moving economic data and events, see DailyFX calendar.
Recent data have helped to support the recent euro /USD rally and has pushed the pair back to 1,1900 for the first time in a month. Above 23,8% Fibonacci retracement level 1.1952 has the next target / resistance level. Although today’s data has helped the movement, recent ones US dollar weakness has also played a major role in the rally. The Federation’s preferred measure of inflation, the US core PCE, released later today (13.30 BST), will now be key in deciding whether the current euro / dollar movement can be extended to the weekend. In addition, end-of-month flows may add an additional layer of volatility to the pair.
EUR / USD daily price chart (December 2020 – July 30, 2021)
Retailer data show 48.03% of traders are short and the ratio of short to long traders is 1.08: 1. The number of traders in net length is 10.72% lower than yesterday and 23.12% lower than last week, while the number of traders short is 14.97% higher than yesterday and 33.67% higher than last week.
We usually take the opposite view of the mood of the crowd, and the fact that traders are short indicates an increase in EUR / USD prices.Traders are even more online than yesterday and last week, and the combination of the current mood and recent changes gives us a stronger EUR / USD-bullish reverse trading bias.
What is your view EUR / USD – bullish or bullish ?? You can let us know via the form at the end of this article or contact the author via Twitter @ nickcawley1.