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EURUSD –A noteworthy Euro rally looks set to continue as retail FX trading crowds aggressively flip direction and sell into EURUSD gains. A contrarian view of sentiment leaves us in favor of gains.
Trade Implications – EURUSD: Traders in our sample had been consistently long the Euro as it plunged to fresh decade lows versus the US Dollar, and we wrote steadily in favor of selling into EURUSD weakness. Yet the recent correction occurs amid signs of a potentially significant US Dollar turnaround.
Traders are now heavily net-short the Euro versus the Greenback, and a contrarian view of crowd sentiment leaves us watching for continued Euro gains.
See next currency section: GBPUSD - British Pound Likely to Rally Further as Dollar Turns
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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