AUD/USD long sentiment grows below 0.6600
Midway through the trading week, we update Client Sentiment levels - percentage of IG clients with long or short positions - for major forex pairs like EUR/USD, USD/JPY, and more. Find out what traders are thinking this week.
Forex sentiment update
AUD/USD making new year-to-date lows well below 0.6600 has coincided with a growing long position among traders to the tune of 80% - the pair now trades about 350 pips from its lowest values since the start of the pandemic.
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Most major currencies depreciated against the US dollar as USD continues its resurgence, and such a trend has resulted in majority short USD positions for each major pair with the exception of the Swiss franc (USD/CHF).
AUD/USD historical prices
How client sentiment works
Client Sentiment shows the percentage of IG client accounts with open positions that are currently long or short. If the majority of client accounts with open positions are long a given market, then they expect the price to rise; if the majority is short, then they expect it to fall. (Values taken using IG's Client Sentiment measure as of the previous day's close.)
Trend followers might go with sentiment, while contrarians would tend to go against the trend. For example, a 65% long measure in EUR/USD could reflect a buying opportunity for trend followers or a selling opportunity for contrarians.
EUR/USD sentiment - 58% long
Last week's sentiment: 59% long
Euro sentiment held mostly unchanged even though EUR/USD fell to new lows under 1.0800 in the last week. Whether it's a flight-to-quality in the USD or just better comparative economic data, the dollar continues to appreciate against major currency partners like the euro.
GBP/USD sentiment - 57% long
Last week's sentiment: 58% long
British pound, similar to the euro, saw little change in sentiment this week though it did move further from its 1.2600 highs against the US dollar of early May. That said, GBP/USD has held in stronger than most major pairs amid the current bull run in the dollar as UK data continues to perform relatively better than non-US regions.
USD/CHF sentiment - 76% long
Last week's sentiment: 51% short
Swiss franc is bucking the trend of majority short USD positions this week as 3 out of every 4 traders are long USD/CHF. The major pair is still relatively low, though it has bounced back more than 200 pips in the last three weeks. Traders might be looking at the carry trade or just mean reverting price action for this overwhelming bias.
USD/JPY sentiment - 66% short
Last week's sentiment: 56% long
Sentiment around USD/JPY has flipped considerably in the last week as 2 out of every 3 traders are now short the pair. Year-to-date, 138.00 has been the upside extreme for the pair, though USD/JPY was able to reach 150.00 in 2022 - highs for the last 30 years of trading.
AUD/USD sentiment - 80% long
Last week's sentiment: 57% long
Australian dollar's descent down to sub-0.6600 prices against the US dollar has reflected an overwhelmingly long sentiment among traders of the major forex pair as now 4 out of every 5 traders are buying AUD/USD.
USD/CAD sentiment - 57% short
Last week's sentiment: 55% long
Canadian dollar has held in relatively well as it trades mostly midrange, and traders aren't leaning too far in one direction or the other as sentiment for USD/CAD circles 50/50 in recent weeks. It will likely take a larger move either to 1.3000 or 1.4000 for a greater opinion to be made of the major pair.
How to trade client sentiment
- Open an account to get started, or practice on a demo account
- Choose your forex trading platform
- Open, monitor, and close positions on forex pairs
Trading forex markets using client sentiment requires an account with a forex provider like IG. Many traders watch major forex pairs like EUR/USD and USD/JPY for potential opportunities based on client sentiment. You can help develop your forex trading strategies using resources like IG’s Trading Academy.
Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.
Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.
This information has been prepared by IG, a trading name of IG US LLC. This material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion. This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. No representation or warranty is given as to the accuracy or completeness of the above information. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. See our Summary Conflicts Policy, available on our website.
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