FXStreet (Barcelona) - Speaking to Dale Pinkert at the Live Analysis Room, FXStreet Content Advisor Gonçalo Moreira said that according to the FXStreet weekly forecast poll, participants holding a bearish view of the euro against the US dollar decreased notably, while bullish expectations are at the highest level in ten weeks (56%)– surpassing the relative frequency of 52% at the time the euro was peaking 1.39/40 (week of May 19).

Key quotes

“The mode jumped from 1.34 to 1.3750 staging a quite unique emotional shift: this central tendency measure tends to move reactively from strong price inflexions at bottoms as well at tops. This time though, poll participants seem to anticipate such a recovery structure, manifesting their future views through the mode, what has to be seen with some caution.”

“Usually it's price shaping the opinions, but this time its an opinion wanting to impose itself on price. This can be interpreted as the key macro events of the week - ECB rate announcement and NFP – having not surprised anyone- and therefore led to a “sell the rumour and buy the fact” kind of dynamic.”

“Since most of market participants (specially those on the short side) got it right last week, we are left with a certain degree of anxiousness for action. This action might not come this week, or if it presents itself in the next days, it might come in the form of a corrective and overlapping affair.”

“Another reason for the limited downside drift in the days to come is the figure of EUR/USD at 1.3800 emerging from the ECB's staff projections presented to the ECB meeting on Thursday where they set this price level as average price for each year throughout the period 2014-2016.”

“The advise for this week is therefore: there is a certain fragility to psychological anchors: people cannot decide until the events actually occur (what is know as nonconsequential reasoning). This might explain the profit taking after the announcement. Moreover, people discover things about themselves, about their own emotions and bias, only after a price change occurs. And this may lead weak sellers to rethink their bearish mood and abandon their short positions if the euro starts to rally.”

Related Articles
  1. Investing News

    China’s Forex Reserves Dropped Significantly

    China’s forex​ reserves dropped by a record $93.9 billion at the end of August to $3.56 trillion because the Central Bank has been selling dollars to provide a cushion to the falling yuan​
  2. Forex

    The Pros and Cons of a Fully Convertible Rupee

    Amid the rising economic power of India, the talks of making the Indian currency fully convertible are gaining momentum. We look at the pros and cons.
  3. Forex Fundamentals

    Chinese Yuan an Unlikely Reserve Currency

    As the world's second largest economy, China's challenge to America’s dominance includes a push to make the yuan (RMB), the world’s reserve currency. Whether it can do that now is unclear.
  4. Economics

    How Currency Enforcement Helped Sink The Trans-Pacific Partnership (TTP)

    One particular barrier to trade that has received much attention of late and caused delays in negotiations of the TPP is exchange-rate manipulation, by which a country artificially devalues its ...
  5. Forex

    Top U.S Forex News Sites

    Breaking news moves forex markets. Here are the top U.S. sites for tracking forex news.
  6. Investing

    Financial News Comparison: Bloomberg Vs. Reuters

    Access to financial information has grown with the expansion of digital news. Bloomberg and Thomson Reuters lead the pack, claiming a majority of the business information market.
  7. Economics

    Who Benefits From South Korea's Lowered Interest Rates?

    South Korea is the latest country to cut interest rates in an attempt to stimulate economic growth.
  8. Forex Education

    The Top Uses For P2P Currency Exchange

    Peer-to-peer (P2P) currency exchange networks offer a viable and cheaper alternative for buying and selling currencies.
  9. Forex

    Steps To Open An Offshore Forex Account

    Here is a simple breakdown of how to open an offshore forex account for US-based users, including legal requirements.
  10. Entrepreneurship

    Top Forex Trading Apps

    A brief overview of the top apps that help forex traders with on time information, charts and more.

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!