Market sentiment analysis:
Markets are in reasonably good form ahead of the monetary policy decisions this week by the Federal Reserve and the Bank of England, as well as Friday’s US non-farm payrolls data and a meeting of OPEC+.In the meantime, IG client sentiment data are sending out a bullish contrarian trading signal for EUR/GBP.
Trader confidence high ahead of policy meetings
Trader confidence is high, with US stock markets not far from their record highs ahead of Wednesday’s monetary policy decision by the Federal Reserve, Thursday’s announcement by the Bank of England and Friday’s US non-farm payrolls data.
That optimism has kept the main US stock market indexes near to their record highs although volumes will likely be low until the Fed and the BoE meetings have ended.
In the meantime, IG client positioning data are sending out a bullish signal for EUR/GBP.
EUR/GBP Price Chart, Daily Timeframe (April 6 – November 2, 2021)
Chart by IG (You can click on it for a larger image)
The retail trader data show 67.77% of traders are net-long EUR/GBP, with the ratio of traders long to short at 2.10 to 1. The number of traders net-long is 11.96% lower than yesterday and 28.21% lower than last week, while the number of traders net-short is 19.26% higher than yesterday and 38.20% higher than last week.
Here at DailyFX, we typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/GBP prices may continue to fall.Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the EUR/GBP price may soon move higher despite the fact traders remain net-long.
EUR/USD Trading Basics: What Is EUR/USD And Why Trade It?
In this webinar, I looked at the trends in the major currency, commodity and stock markets, at the forward-looking data on the economic calendar this week, at the IG Client Sentiment page on the DailyFX website, and at the IG Client Sentiment reports that accompany it.
— Written by Martin Essex, Analyst
Feel free to contact me on Twitter @MartinSEssex
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