EUR/USD Ratio: 1.34 Signal: Bearish
EURUSD – For the third time in the past three months, EURUSD has tested and yielded to support at 1.5300. For the retail trading community, the highly visible technical level encouraged the group to take on its highest ratio of long positions since late 2006. This week, the proximity of support has kept speculative traders with their long positions in the belief that volatility will remain tame and the EURUSD’s three-month old range will hold. Reflecting this confidence in steady seas ahead, the Speculative Sentiment Index Ratio held above parity for the second consecutive week at 1.34 with nearly 57% of the market group holding long euros. However, considering the frequency with which the retail sector is on the wrong side of the market, this first back-to-back positive reading in 18 months gives a relatively strong contrarian reading for a potential trend reversal. The details of the report show that long positions are 10.4% higher than yesterday but 6% weaker than last week. At the same time, shorts have dropped 15.3% from Wednesday yet are 11.4% stronger than last Thursday. Overall, open interest is 2.6% higher on the week and 3.1% above the monthly average.