Euro Losses may Slow on Sentiment
EURUSD – Effectively rangebound Euro/US Dollar price action leaves forex trading crowd sentiment quite near neutral, giving little conviction in our short-term forecasts for the EURUSD. In the past two weeks we’ve written that a sharp build in long interest gave contrarian signal that the pair could continue lower. Yet more recent sentiment readings actually show that trading crowds have once again turned net-short the Euro against the US Dollar. The ratio of long to short positions in the EURUSD stands at -1.19 as nearly 54% of traders are short. Yesterday, the ratio was at -1.31 as 57% of open positions were short.
A rundown shows that long positions are effectively unchanged from yesterday and a negligible 1.5 percent higher since last week. Short positions have proven far more volatile, dropping 8.5 percent overnight but remaining 9.1 percent higher on a week-over-week basis. The build in short interest moderates our previously bearish EURUSD bias, but we maintain that the significant shift in positioning over the past several weeks favors a larger trend reversal for the previously high-flying pair. We will need to wait for sentiment to grow more strongly one-sided to make forecasts with conviction.
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