Market update: euro sets stage for longest weekly losing streak since 1997

EUR/USD sentiment outlook: bearish

After a -0.8 percent drop against the US dollar over the past 24 hours, the euro is now on course for a ninth consecutive weekly loss. That would be the longest losing streak since 1997! Meanwhile, retail traders continue becoming more bullish on the single currency. This can be seen by looking at IG Client Sentiment (IGCS), which often functions as a contrarian indicator. With that in mind, is further pain in store for EUR/USD?

The IGCS gauge shows that about 71% of retail traders are net-long EUR/USD. Since most of them are biased to the upside, this hints that prices may continue falling down the road. Meanwhile, upside exposure has increased by 13.79% and 1.95% compared to yesterday and last week, respectively. With that in mind, this is offering a stronger bearish contrarian trading bias.

IG Client Sentiment chart

EUR/USD technical analysis

Taking a look at the daily chart below, EUR/USD has extended losses under the 200-day moving average. Now, prices have fallen to the May low of 1.0635, as well as closing at the lowest point since March. With that in mind, EUR/USD is thus facing a potential key turning point.

Still, even a bounce off support would not necessarily overturn the downside bias since July. The falling trendline from then is guiding prices lower. Clearing it would offer an increasingly bullish view. Otherwise, clearing lower exposes the March low of 1.0516.

Euro daily chart

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