Euro May See Bigger Bounce as Sentiment Turns
- EURUSD – Euro May Rally Further Against US Dollar
- GBPUSD – British Pound May Fall Further
- USDJPY – Yen May Set Important Top (USDJPY Bottom)
- USDCHF – Swiss Franc expected to Fall Further
- USDCAD – Canadian Dollar Forecast Bullish
- GBPJPY – British Pound Declines May Continue vs. JPY
Forex trading crowds have sold into recent Euro advances against the US Dollar (ticker: USDOLLAR) rallies, underlining risks a shift in trader sentiment could send the Euro/US Dollar higher through short-term trading.
The total number of traders long the Euro against the US Dollar has fallen 24 percent since last week, while short interest has jumped 29 percent through the same stretch. Typically we see such strong moves in sentiment ahead of turning points in price action. It will be critical to watch short-term EURUSD trading, especially as FX futures and options positioning remains near major historical extremes.
We hesitate to buy into a strong Euro downtrend, but the most recent shifts in positioning suggest a noteworthy short-term correction higher may be imminent.
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--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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