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Euro Forecast Shifts as Retail Crowds Capitulate

Euro Forecast Shifts as Retail Crowds Capitulate

David Rodriguez, Head of Product
ssi_eur-usd_1_body_Picture_7.png, Euro Forecast Shifts as Retail Crowds Capitulate

Retail FX trading crowds remain heavily net-short the Euro against the US Dollar (ticker: USDOLLAR), but a noteworthy shift in positioning has led one of our sentiment-based trading strategies to get short from $1.3150.

According to our Speculative Sentiment Index data, the majority of retail traders turned short Euro in early August as it crossed above the $1.23 mark, and our contrarian strategies called for further gains. Yet we’ve since seen short interest fall 17 percent since last week while longs are up a greater 30 percent.

We don’t often like to second-guess our long-standing contrarian bias to retail crowd positioning, but the important turn in sentiment since last week serves as early warning of a Euro turnaround.

--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com

To receive the Speculative Sentiment Index and other reports from this author via e-mail, send a message with subject line “Distribution List” to drodriguez@dailyfx.com;

Contact David via

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Meet the DailyFX team in Las Vegas at the annual FXCM Traders Expo, November 2-4, 2012 at the Rio All Suite Hotel & Casino. For additional information regarding the schedule, workshops and accommodations, visit the FXCM Trading Expo website.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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