Euro Likely to Rally Further on Post-EU Summit Surge
- EURUSD – Euro Rally Likely to Continue Post EU Summit
- GBPUSD – British Pound to Strengthen Further
- USDJPY – Yen Eyes Fresh Record Highs
- USDCHF – Swiss Franc Forecast to Appreciate
- USDCAD – Canadian Dollar May Rally Further
- GBPJPY – British Pound Outlook Bullish vs Yen
Retail trading crowds remain exceedingly net-long the US Dollar (ticker: USDOLLAR) as it falls sharply against the Euro following the most recent European summit. Such strongly one-sided sentiment suggests the Euro/US Dollar could continue to rally despite significant surges.
Sizeable US Dollar losses have been met with similarly aggressive crowd buying, giving us contrarian signal that the Greenback could fall to fresh lows. Clearly such extreme moves tell us that the Euro/US Dollar could soon see a significant turnaround. Yet trend turnarounds are extremely rare; better to bet on trend extensions as these last much longer than the single reversal.
A record correlation between the US Dollar and the Dow Jones Industrial Average underlines the fact that markets are increasingly moving in tandem. Thus we may expect that the US Dollar will continue to trend lower as the Dow and S&P 500 climb to fresh highs.
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--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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