Crowd Sentiment Favors Euro Losses
EURUSD –Traders remain aggressively long the Euro against the US Dollar, giving consistent contrarian signal that the pair may continue lower through near-term trade. Yet we should likewise warn that FX Options sentiment has hit its most bearish extremes on the EURUSD in at least 7 years, warning of a potential for a larger topside correction. The conflicting signals are obviously difficult to reconcile, and we may have to wait and see whether the EURUSD is able to break below key multi-month lows.
The ratio of long to short positions in the EURUSD stands at 1.73 as nearly 63% of traders are long. In detail, long positions are 2.8% higher than yesterday and 23.3% stronger since last week. Short positions are 13.9% higher than yesterday and 18.6% weaker since last week. The fact that traders are long and continue buying gives us contrarian signal the EURUSD may continue lower.
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