Forex Market Sentiment: Short EUR & GBP

The forex market saw sentiment around both EUR/USD and GBP/USD flip from long to short in the same week that the two major pairs traded near year-to-date highs; it seems like IG clients have been selling into the rally with new short positions or taking profits by closing past long positions. No major changes to sentiment occurred outside these two European currencies.

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 - 54% Short

Last week's sentiment: 60% Long

Sentiment flipped from long euro to short in the last week amid EUR/USD edging closer to the 1.10 level - the pair traded above 1.09 for a little less than one trading day. IG clients seem to be selling euros into their rally against US dollars after being overwhelmingly long EUR/USD when the major pair was closer to 1.05.

GBP/USD - 54% Short

Last week's sentiment: 60% Long

Pounds and euros continue to trade in a highly correlated fashion against the US dollar as GBP/USD made the same change in sentiment as EUR/USD. GBP/USD edged closer to 1.25 - a price level unsurpassed since June 2021 - in the last week of trading.

USD/JPY - 52% Short

Last week's sentiment: 51% Long

Japanese yen sentiment continues to circle 50/50 even as USD/JPY rises and falls with fear from the ragional banking crisis. Yen is traditionally seen as a flight-to-quality asset - rising in times of fear - which has caused USD/JPY to fall dramatically in recent weeks.

AUD/USD - 72% Long

Last week's sentiment: 67% Long

Though Australian dollars have not been as volatile as yen or euros in the last week, AUD/USD sentiment, again, is the largest of the major pairs in either direction. As most major currencies rallied against USD, Aussie held relatively flat between 0.66 and 0.68.

USD/CAD - 59% Short

Last week's sentiment: 62% Short

Canadian dollar was the only other major currency, beside Australian dollar, to post a client sentiment with a majority short-USD position past just a few percentage points. Like AUD, CAD has traded mostly sideways near its lows against the US dollar; more IG clients than not seem to be expecting USD/CAD to revert lower at some point.