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Euro Remains Weak, but Sentiment Warns this may not Last

Euro Remains Weak, but Sentiment Warns this may not Last

David Rodriguez, Head of Product

Why and how do we use the SSI in trading? View our video and download the free indicator here

EURUSD – Retail FX traders remain short the Euro versus the US Dollar, and a contrarian view of crowd sentiment suggests the EUR/USD may continue higher. It is unusual to note, however, that our data shows traders have remained short despite the fact the pair trades near key lows. Past performance is clearly not indicative of future results, but we most often see retail traders sell into rallies and buy into declines.

We are thus left in an admittedly unclear position; recent price trends arguably favor further Euro weakness and yet a contrarian view of retail sentiment suggests we should buy.

The fact that traders are unwilling to buy into weakness may ultimately suggest the broader EUR/USD uptrend from late 2015 remains intact. We will look to buy any sharp rallies above key resistance at $1.12.

See next currency section: GBPUSD - British Pound Likely to Head Higher before it Drops

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