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Euro May Have Finally Turned

Euro May Have Finally Turned

David Rodriguez, Head of Product


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EURUSDThe Euro decline caught many retail traders on the wrong side of the market as a small majority bought into weakness. Yet the most recent Euro bounce has invited a sharp wave of selling, and the sharp capitulation warns of the potential for further short-term EUR gains.

Theratio of long to short positions in the EURUSD stands at -1.84 as 35% of traders are long. Yesterday the ratio was -1.39; 42% of open positions were long. Long positions are 16.1% lower than yesterday and 28.9% below levels seen last week. Short positions are 11.6% higher than yesterday and 46.4% above levels seen last week. Open interest is 0.0% lower than yesterday and 15.1% above its monthly average. We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are short gives signal that the EURUSD may continue higher. The trading crowd has grown further net-short from yesterday but unchanged since last week. The combination of current sentiment and recent changes gives a further bullish trading bias.

See next currency section: GBPUSD - British Pound Likely to Lose Further versus US Dollar

--- Written by David Rodriguez, Quantitative Strategist for

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