EURUSD – Forex trading crowds have bought aggressively into Euro/US Dollar losses, giving contrarian signal that the pair could hit further lows. The Euro’s break of key support at the psychologically significant $1.30 mark and previous lows of $1.2850 opens up much larger declines. Yet we warn of getting aggressively short Euro as large speculators are their most bearish EURUSD in history.
The ratio of long to short positions in the EURUSD stands at 1.69 as nearly 63% of traders are long. This is a noteworthy shift from yesterday when the ratio was at 1.25 and 56% of open positions were long. In detail, long positions are 19.0% higher than yesterday and 23.7% stronger since last week. Short positions are 12.0% lower than yesterday and 20.2% weaker since last week
When retail trading crowds are long and continue growing further net-long, we often see subsequent EURUSD declines.
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--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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