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Euro Outlook Remains Cautiously Bullish until this Changes

Euro Outlook Remains Cautiously Bullish until this Changes

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 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.