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).
“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.”