Sentiment Suggests EURUSD May Reverse Downtrend
EURUSD: Retail trader data shows 37.4% of traders are net-long with the ratio of traders short to long at 1.67 to 1. In fact, traders have remained net-short since Apr 06 when EURUSD traded near 1.22799; price has moved 0.5% higher since then. The number of traders net-long is 9.2% lower than yesterday and 18.2% lower from last week, while the number of traders net-short is 1.3% higher than yesterday and 7.5% higher 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. Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EURUSD-bullish contrarian trading bias.
--- Written by Dylan Jusino, DailyFX Research