Euro Reversal Could Gather Pace, Sentiment Warns
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EURUSD: Retail trader data shows 38.8% of traders are net-long with the ratio of traders short to long at 1.58 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.1% higher since then. The number of traders net-long is 13.4% higher than yesterday and 21.1% higher from last week, while the number of traders net-short is 3.0% higher than yesterday and 3.8% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current EURUSD price trend may soon reverse lower despite the fact traders remain net-short.
--- Written by Christopher Vecchio, CFA, Senior Currency Strategist
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