Euro Primed to Test Range Lows
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EURUSD – Retail FX traders have bought into recent Euro declines versus the US Dollar, and once again this acts as confirmation that the EUR/USD has made a false attempt at a breakout only to stick to its narrow range. We most often treat retail FX trader sentiment as a contrarian indicator to price action, and indeed last week we cited heavily-short trader positions as a key reason we looked to buy.
Yet it remains clear that retail traders will often do well in range-bound market conditions; buying low and selling high works best in directionless markets. A recent shift towards crowd buying suggests the EUR/USD may continue onto range lows, but we will likely need to see a big jump in volatility to take real conviction in our near-term trading forecasts.
See next currency section: GBPUSD - British Pound Forecast to Break Key Lows
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.