EUR/USD Ratio: -1.71 Signal: Bullish
EURUSD – The extreme in speculative retail positioning seen last week was quickly dampened by fleeting liquidity and a steadfast range. Looking back to last Thursday, the EURUSD Speculative Sentiment Index showed the most extreme short bias in positioning since November of 2006 as traders built up positions before a heavy mix of event risk. Not only was the perennial, top market-moving non-farm payrolls release due, but an ECB rate decision was expected to end with quarter-point hike. However, despite the potential for severe volatility, 71% of the retail community was short with the belief that spot would be unable to overtake 1.60. That presumption would ultimately pay off. This week, price action has stabilized; and the drop in volatility and pull back from technical barriers has led positioning to retreat as well. The euro pair’s SSI ratio stood at -1.71 (compared to -2.48 from last week) with nearly 63% of the market group short. Looking into the details, it is obvious that there is still considerable confidence in range conditions. Long positions edged 0.1% lower since yesterday but were a significant 33.7% weaker than last Thursday. On the other side of the trade, shorts rose a moderate 0.8% and grew 20% on the week. Conversely, the strength of the range and drop in volatility has also led open interest to drop 7.9% - leaving net positioning 0.1% below the one-month moving average.