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NZDUSD – The majority of retail FX traders in our sample remain short the New Zealand Dollar versus the US Dollar, and a contrarian view of crowd sentiment leaves us in favor of buying into NZD/USD gains. The ratio of open short positions to those long is a notable 1.8 to 1—matching the largest extreme we’ve seen since the NZD traded near $0.85 in July, 2014.
It’s possible such one-sided sentiment warns of a potential sentiment and price extreme, but we will maintain our contrarian forecast for further NZD gains until we see a marked shift towards buying.
See next currency section: XAUUSD - Gold Prices in Position for Continued Weakness
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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