Market sentiment analysis:
- The Euro and the British Pound have both climbed against the US Dollar after the US mid-term elections that saw the Democrats win the House but the Republicans retain the Senate.
- Retail trader sentiment data suggest both those trends may now continue.
Sentiment data positive for EURUSD and GBPUSD after US mid-term elections
Both GBP and EUR could extend their advances against USD after the US mid-term elections, according to retail trader sentiment data.
The figures for EURUSD show 55.4% of traders are net-long, with the ratio of traders long to short at 1.24 to 1. In fact, traders have remained net-long since October 1, when EURUSD traded near 1.16344; the price has moved 1.5% lower since then. The number of traders net-long is 20.3% lower than yesterday and 21.9% lower from last week, while the number of traders net-short is 16.6% higher than yesterday and 23.4% higher from last week.
At DailyFX, we typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EURUSD prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current EURUSD price trend may soon extend higher despite the fact traders remain net-long.
For GBPUSD, the data show 61.2% of traders are net-long, with the ratio of traders long to short at 1.58 to 1. In fact, traders have remained net-long since September 20, when GBPUSD traded near 1.31089; the price has moved 0.2% higher since then. The percentage of traders net-long is now its lowest since October 17, when GBPUSD traded near 1.31008. The number of traders net-long is 13.9% lower than yesterday and 28.8% lower from last week, while the number of traders net-short is 2.8% higher than yesterday and 59.6% higher from last week.
As we typically take a contrarian view to crowd sentiment, the fact traders are net-long suggests GBPUSD prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may also soon reverse higher despite the fact traders remain net-long.
Market forecasts after the US mid-term elections:
GBP and EUR Well Placed to Advance After US Mid-Term Elections
EURUSD Analysis: Resistance Curbs Further Upside, Eyes on FOMC
GBPUSD Price: Important Bullish Price Zone Nears
USD Price Lower in Europe After US Mid-Term Elections, May Fall Further
US Dollar May Turn Higher as Markets Digest Midterms Outcome
Asian Stocks Mostly Rise As Markets Digest US Midterm Vote
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--- Written by Martin Essex, Analyst and Editor
Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex
