Bearish EUR/USD Retail Sentiment Remains Despite Fresh May Highs

Talking Points:

– EUR/USD Retail Crowd Remains Net-Short Despite Fresh Monthly Highs.

– AUD/USD Stalls at Resistance Ahead of Australia Employment Report.

– USDOLLAR Eyes February Low (11,736) as Weak ADP Drags on NFP Expectations.

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EUR/USD

Chart – Created Using FXCM Marketscope 2.0

• 
  EUR/USD climbs to a fresh monthly high (1,1366) with the RSI threatening overbought territory; close above 1,1300 (78.6% retracement) raises the risk of seeing a full retracement of the decline from the February high (1.1532).
  


• 
  With the ongoing correction in Bunds & the DAX, the near-term dynamic may generate a further advance in EUR/USD, but the long-term outlook for the single-currency remains bearish as the European Central Bank (ECB) embarks on its quantitative easing (QE) program.
  


• 
  Despite the fresh monthly high, DailyFX Speculative Sentiment Index (SSI) shows the retail crow remains net-short EUR/USD since March 9, with the ratio at an extreme -2.58.
  

AUD/USD

• 
  Despite the weaker-than-expected Australia Retail Sales report, AUD/USD appears to be making another assault at near-term resistance around 0.8000 (61.8% retracement) to 0.8020 (38.2% expansion).
  


• 
  With Australia’s Employment report expected to show another 4.0K expansion in April, a positive development may heighten the appeal of the higher-yielding currency as the Reserve Bank of Australia (RBA) appears to be approaching the end of its easing cycle.
  


• 
  Close Above near-term resistance should expose the next topside area of interest coming in around 0.8120 (23.6% expansion) to 0.8130 (78.6% retracement).
  

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USDOLLAR(Ticker: USDollar):

Chart – Created Using FXCM Marketscope 2.0

• 
  Dow Jones-FXCM U.S. Dollar coming up against the February low (11,736); downside targets remain favored as the bearish RSI momentum gathers pace.
  


• 
  The weaker-than-expected ADP Employment report may drag on market expectations for Non-Farm Payrolls (NFP) amid the ongoing slack in the U.S. economy.
  


• 
  Will continue to watch the monthly opening range, but may see another run at the February low (11,736) as the USDOLLAR continues to come off of near-term resistance around 11,901 (78.6% expansion).
  

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— Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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Bearish EUR/USD Retail Sentiment Remains Despite Fresh May Highs