Forex Market Sentiment: Week of February 27, 2023

The majority of IG clients are holding short USD positions against the dollar’s major-pair counterparts, and those shorts expanded almost across the board including 72% longs and 70% shorts in AUD/USD and USD/CAD, respectively. The increases in dollar shorts came in a trading week where USD strengthened to varying degrees in each pair relationship.

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 Friday's close.)

EUR/USD – 63% Long

Last week’s sentiment: 59% Long

The reemergence of USD strength sent EUR/USD back below 1.06, which has coincided with a slight build in long positions on the euro – EUR/USD positions increasing from 59% to 63% long among IG clients.

GBP/USD – 64% Long

Last week’s sentiment: 64% Long

The British pound has performed well relative to the euro and, in particular, the Japanese yen and Australian dollar. That said, GBP/USD broke below 1.20 again and could have more room to decline if the dollar continues to strengthen.

USD/JPY – 63% Short

Last week’s sentiment: 60% Short

While client sentiment on the yen might be mostly unchanged from last week, prices absolutely are not. USD/JPY rallied back above 136 as the yen’s worst performer of the major pairs status was renewed amid losses to the dollar, euro, and pound.

AUD/USD – 73% Long

Last week’s sentiment: 67% Long

Australian dollar buyers have now ascended to 72% of IG clients with open positions in AUD/USD – the 5% gain in client sentiment coinciding with a -2% decline in the exchange rate itself over the last week. Australian GDP Tuesday night could sway this heavily-longed market.

USD/CAD – 73% Short

Last week’s sentiment: 61% Short

Canadian dollar longs (and thus USD/CAD shorts) climbed more than 10 percentage points among IG clients with positions in the pair. Though CAD has been one of the strongest opponents to USD amid the latter’s recent bull run, it is now closer than any major pair to its extreme lows (highs in USD/CAD) from last year.