Euro Outlook Remains Cautiously Bullish until this Changes
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EURUSD – Retail FX traders have sold aggressively into the recent Euro rally versus the US Dollar, and our positioning data shows traders are now at their most net-short EUR/USD since it last traded above $1.13 through mid-August. We most often take a contrarian view to ‘crowd’ sentiment; if most traders are short we prefer to be long and vice versa.
It is difficult to escape the feeling of déjà vu, however; it was only three weeks ago when similar bearish extremes coincided with a EUR/USD turn lower. And a key sticking point is that retail traders often do well in slow-moving and range-bound market conditions.
We will remain cautiously bullish the Euro versus the Dollar, but it is important to note it is entirely likely the EUR/USD sticks to its tight trading range and fails to break above key resistance in the $1.13-1.1366 range. It would take a substantive shift towards crowd buying to shift our overall bullish bias.
See next currency section: GBPUSD - British Pound Once again at Risk of Turnaround
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.