EUR/USD at 1.3800, it's the highest mode so far

When asking for the typical outcome of the latest release of the sentiment poll, one would be given the central tendency measures (the mean, the median and the mode) which, when smoothed into a new average becomes 1.3850, a figure a few pips shy of Friday's close at 1.3885. Put into historical context: the week before the poll was printing 1.3637 as the “average of averages”, which represents indeed a substantial rise. It seems like the poll, as an aggregate, is mimicking price for a second test of the the 1.3939 top from 5 weeks ago.

What about the mid and longer-term views? These also saw a proportional increase in the averages to the price action. Poll participants are currently forecasting a EUR/USD around 1.38 in one month time and 1.36 in three months in the future. When was the last time we heard from those figures under 1.33? It was September 2013. Remarkable is the ascending movement across all time horizons but the piece of data that stands out this week is the mode which was registered among participating analysts: at 1.3800, its the highest print so far.



All indicator parameters are showing a “business as usual” type of activity. The price ranges among the lowest and highest forecast values across the 3 time horizons are at normal levels. As such we see five hundred pips in the 1-week forecast, and one thousand and two thousand pips for the 1-month and 1-quarter prognosis respectively.
The ratio between bulls and bears increased a little across all time horizons but it is not showing extreme sentiment neither.
On the technical front most of the central tendency numbers are below this week's pivot point (1.3829), an offsetting signal but not strong enough to scare the bulls.



What does it mean for traders? In the 1-month and 1-quarter predictions, the mean and the median are below the mode. This is a typical condition of a chronical negative skewness. The fact that a 200 pip rally staged from Monday to Friday in the EUR/USD exchange rate hasn't really changed the trader's opinions to an extreme, shows that participants are in a “let's wait and see” mode.

If we could witness upward migrations in the EUR/USD forecasts with weekly performances under 0.5%, what will an above-average weekly performance like we just had of 1.32% lead to in the weeks to come? The G20, IMF, and World Bank meetings and their announcements this week are probably going to result in more volatility. It will be interesting to see how the poll reacts to it post holiday.




Note: The Weekly Sentiment Report provides a breakdown of the data published in the Currencies Forecast Poll through the use of descriptive statistics. The Currencies Forecast Poll is published every Friday at 17:00 Central European Time by FXStreet and aggregates the forecasted values from individuals and companies that were reported from Wednesday to Friday of the same week.The data represents what direction members feel the market will be in the next week, one month and three months.