Euro Forecast Could Shift Rapidly
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EURUSD – Retail FX traders remain short the Euro versus the US Dollar, and a contrarian view of crowd sentiment favors near-term Euro strength. Indeed, if the majority of traders in our sample are short we prefer to be long and vice versa. Past performance is not indicative of future results, but our data suggests that going against the crowd makes sense.
The clear caveat is the same data shows retail traders tend to outperform in slow-moving market conditions. In practice this means that going against the ‘crowd’ can be a losing strategy when currencies remain in tight ranges—much as the Euro/US Dollar has done through recent trading.
We may need to wait for a sharp jump in volatility to once again take a purely contrarian view of crowd sentiment and favor a EUR/USD break higher.
See next currency section:GBPUSD - British Pound Downtrend May Finally be Over
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.