Euro Forecast turns Bearish on Post-Fed Tumbles
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EURUSD – An impressive post-Federal Reserve reversal in the US Dollar has led to a similar turn in retail forex sentiment, and indeed we see risks that the EUR/USD may have set a short-term peak near the $1.1050.
In the past two weeks we’ve highlighted the fact that the majority of retail FX traders in our sample have remained short the Euro versus the US Dollar. When most are short, we most often look to take the opposite side of the trade and look for buying opportunities, and indeed that has worked reasonably well given a major shift in EUR/USD sentiment.
Yet crowds are now almost squarely neutral—a mere 52 percent of traders are short—as total open long positions have risen 14 percent while open short positions have fallen by the same amount since last week. The sharp shift warns that the Euro may have set an important short-term high, and risks remain to the downside through near-term trading.
See next currency section: GBPUSD - British Pound at Risk for Further Declines
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.