Forex Traders Flip, Euro Likely to Gain
EURUSD –Traders are on the verge of flipping net-short the Euro against the US Dollar for the first time in two weeks, giving contrarian signal that the EURUSD may continue its rally. Traders turned net-long the EUR when the pair traded above 1.4200 and the SSI accurately called for further declines. We likewise recently warned 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 combination gives us a strongly bullish EURUSD bias.
The ratio of long to short positions in the EURUSD stands at 1.13 as nearly 53% of traders are long. Yet long positions are 11.5% lower than yesterday and a sizeable 37.2% weaker since last week. Short positions are a modest 2.1% lower than yesterday and 6.8% stronger since last week. The crowd’s shift towards EURUSD selling gives contrarian signal the pair may continue to rally.
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