Euro Trend has Turned, Looking to Sell Bounces
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EURUSD – A major shift in retail FX trader positioning leaves the trading crowd long EURUSD for the first time since it set a lasting bottom near $1.28.
Trade Implications – EURUSD: The fact that traders are net-long suggests that the Euro trend may have turned, and indeed we continue to favor EURUSD weakness as it breaks key support.
Yet we would not advocate selling Euro at current levels—particularly as we may be at an important short-term sentiment extreme. Retail FX trader long positions have surged by more than 200 percent since the Euro peaked near $1.40. Given the exceedingly low volatility environment, we are watching for a EURUSD bounce before any important continuation lower. Look to sell into significant resistance near $1.3710.
See next currency section: GBPUSD - British Pound Forecast Favors Further Declines
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.