Euro Currency: Short Sentiment Building

Euro currency near 1.10 versus the US dollar continues to be a point of contention for traders as sentiment seems to be edging shorter and shorter with every tick closer to and beyond the level - IG Client Sentiment has gone from 50/50 to 55% short from last week to present as EUR/USD has risen from 1.08 to 1.10 in the same time.

While 1.10 is a relatively high price for the last year of trading, EUR/USD traded above 1.20 as recently as Summer 2021. Sentiment shows more traders are thinking under 1.10 on EUR/USD than over in the short term, at least, but only time will tell whether this is the same resistance level as a few months ago or the new support for the future.

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 - 55% Short

Last week's sentiment: 50% Short

Coming off last week's 50/50 split on EUR/USD sentiment while the market was closer to 1.08, it seems that traders are on the short side of the market above the level. No matter the opinion, many are watching this euro market to see if it will regain prior years' strength or reverse course for 2022's lows.

GBP/USD - 52% Short

Last week's sentiment: 50% Short

Not much has changed for British pound prices in the last week, and not much has changed for GBP/USD sentiment. The major forex pair continues to hug 1.25 as sentiment around it is as close to a 50/50 split as any major pair trading this week.

USD/JPY - 61% Short

Last week's sentiment: 63% Short

Interesting to see Japanese yen sentiment hold bullish as other major pairs show longer US dollars biases. USD/JPY is trading close to 135 and has been as high as 150 in the last year of trading, but traders seem to be thinking lower is the next direction.

AUD/USD - 66% Long

Last week's sentiment: 77% Long

Australian dollar - trapped between 0.66 and 0.68 against US dollars - continues to hold bullish sentiment as AUD/USD remains the most longed or shorted of the major pairs at 66% long. A trip north of 0.68 could ease some of that long bias, but the pair hasn't been able to eclipse such a level since February.

USD/CAD - 54% Long

Last week's sentiment: 50% Short

Canadian dollar is in a bit of a no man's land in terms of both price and sentiment - USD/CAD has been one of the least volatile major forex pairs of 2023 so far. A jolt to US or Canadian inflation or interest rates could have the potential to shift USD/CAD from its 1.34-1.38 slumber of the last several months.