Euro Poised to Test Multi-Year Lows versus Dollar
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EURUSD – The Euro has turned sharply lower, and our sample of retail FX traders shows that crowds have bought aggressively into the EURUSD slide. A contrarian view keeps us watching for further losses.
Trade Implications – EURUSD: Last week we cited a sharp jump in crowd selling as a key reason that the Euro may have set an important low, but the opposite has happened in the past two days in particular. With yesterday’s post-FOMC decision EURUSD tumble, total open long positions are up 16 percent while short positions are down 31 percent since last week.
Long positions make up 59 percent of total open interest, and a further shift towards crowd buying would keep us squarely focused on a EURUSD test of multi-year lows near $1.2250.
See next currency section: GBPUSD - British Pound Forecast Calls for Further Weakness
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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