Forex Market Sentiment: Week of March 13, 2023

The more range-bound forex pairs - EUR/USD and GBP/USD - have remained relatively unchanged in sentiment, while the more active currency pairs - AUD/USD and USD/ CAD - are trading with more than 2/3rds of the sentiment leaning in one direction. Also, Japanese yen against US dollar is close to 50/50 in terms of client sentiment.

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 leaning to one direction, 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 – 60% Long

Last week’s sentiment: 57% Long

With euro currency trading in a range between 1.05 and 1.08 against the US dollar, sentiment on EUR/USD has held relatively unchanged in recent weeks. IG clients have gone from 57% to 60% on the major pair, as the short-USD trend continues to play out though to a much lesser extent relative to other pairs like AUD/USD.

GBP/USD – 61% Long

Last week’s sentiment: 66% Long

British pounds are telling the same story as euros, more or less, as GBP/USD has traded between 1.18 and 1.22 for the greater part of 2023. Though the swings have been wide at recent points - more than 0.30 of high-to-low range in 2022 - the first quarter of the year has found GBP relatively range bound in both price and sentiment.

USD/JPY – 53% Short

Last week’s sentiment: 59% Short

Japanese yen prices have been some of the most volatile of major currencies in 2023, and IG client sentiment of late has coincidentally been shifting back and forth. Sentiment on USD/JPY is as close to 50/50 as any major forex pair with prices falling well below 135 this week. IG clients could shift to long if this trend - falling USD/JPY echange rates reflecting lesser short sentiment - continues.

AUD/USD – 69% Long

Last week’s sentiment: 77% Long

Still one of the most one-sided major forex pairs in terms of sentiment, IG clients have shifted from a whopping 77% to just 69% long AUD/USD. This slight lightening up of long positions comes at a time when Australian dollars have rallied back from below 0.66 against US dollars, but AUD/USD still rests near year-to-date lows.

USD/CAD – 70% Short

Last week’s sentiment: 71% Short

Canadian dollars continue to be one of the weakest major currencies relative to US dollars, and USD/CAD has now become the most one-sided major forex pair in terms of IG client sentiment narrowly beating out AUD/USD. Canadian and Australian dollars have been volatile in 2023, and that volatility appears to be shifting sentiment among traders.