EUR/USD gaining long sentiment below 1.0700

Forex sentiment update

Short US dollar sentiment is building among most of the major forex pairs, especially in EUR/USD, USD/JPY, and AUD/USD - 66% long, 69% short, and 79% long, respectively. USD appreciated against all major currency partners in May, including a 18-of-20-day run against EUR whereby EUR/USD lost 400 pips and closed lower 90% of the days in said time frame

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USD also appreciated against GBP and CAD in the last week, though it was not as large a move as seen in the pairs mentioned above; thus sentiment is not as extreme in GBP/USD or USD/CAD - 56% long and 58% short, respectively.

EUR/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.

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EUR/USD sentiment - 66% long

Last week's sentiment: 58% long

Long euro sentiment grew in the same week where EUR/USD fell below 1.0700 for the first time since mid-March. Highs and lows for the last year of trading in EUR/USD are 1.1100 and 0.9550, respectively.

GBP/USD sentiment - 56% long

Last week's sentiment: 57% long

British pound has not seen nearly as much downside against the US dollar as the euro has - GBP/USD is approximately unchanged in the last week of trading; UK data has been coming in stronger than that of the Euro Area. This has coincided with a near-50/50 split between long and short traders of the pair.

USD/CHF sentiment - 70% long

Last week's sentiment: 76% long

USD continues to bounce back from multi-year lows against CHF made weeks ago, but the long USD/CHF sentiment has held strong at 70% as the majority of traders seem to think more upside can be had. That said, the rally back in US dollars leaves plenty of potential downside in USD/CHF.

USD/JPY sentiment - 69% short

Last week's sentiment: 66% short

Another week and another new high for USD/JPY as the pair reached out above 140.00 in recent trade. Short sentiment is gaining on the US dollar versuse the Japanese yen as 69% of traders are positioned on the short side of USD/JPY.

AUD/USD sentiment - 79% long

Last week's sentiment: 80% long

The Australian dollar has had a rough few weeks as AUD/USD broke down below 0.6500 for the first time since November 2022. The majority of traders lie on the long side of the pair positioned for a bounce, though the market has traded as low as 0.6200 in the last year.

USD/CAD sentiment - 58% short

Last week's sentiment: 57% short

Canadian dollars have not been in the spotlight recently as USD/CAD sits relatively calmly near 1.3600. Until the major pair breaks out of its year-to-date range of 1.3400 to 1.3800, USD/CAD is likely to exhibit sentiment closer to 50/50 than others.

How to trade client sentiment

1. Open an account to get started, or practice on a demo account
2. Choose your forex trading platform
3. 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. Contrarians might go against the prevailing sentiment in a forex pair, while trend followers might go with it.

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.