Long USD/CAD sentiment grows below 1.3600

Forex sentiment update

All six USD pairs below gain long dollar sentiment week-over-week after this morning's CPI data met expectations. USD/CAD saw the biggest change with 13% more traders taking long positions this week. Sentiment in the pair is still majority short at 59% while trading close to 1.3550.

Client sentiment is especially subject to change over the next two weeks with several key interest rate decisions coming. The European Central Bank meets tomorrow while central banks in US, UK, Japan and Switzerland all meet next week.

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.

EUR/USD sentiment - 64% long

Last week's sentiment: 68% long

Long euro sentiment weakened slightly after EUR/USD rebounded from last Friday's lows to trade near 1.0750 this week. There's potential for price action in the pair later this week as the ECB meets to decide interest rates tomorrow morning.

GBP/USD sentiment - 63% long

Last week's sentiment: 65% long

Traders are still majority long GBP/USD as it continues to trade around 1.2500. Both countries decide interest rates next week that could shift price levels in the pair.

USD/JPY sentiment - 73% short

Last week's sentiment: 76% short

Language from Bank of Japan Governor Ueda suggesting there may be future tightening in monetary policy led to a brief downturn in USD/JPY on Sunday, but the pair has since reverted back to trade above 147.00 midweek.

USD/CHF sentiment - 69% long

Last week's sentiment: 67% long

USD/CHF has spent the past week above 0.8900 for the first time since the beginning of July. Two percent more traders believe this US dollar strength will continue against the Swiss franc with 69% holding long positions.

AUD/USD sentiment - 78% long

Last week's sentiment: 83% long

AUD/USD is back above 0.6400 after last Wednesday's year-to-date low under 0.6380. Almost four out of five traders still hold long positions - anticipating future AUD strength against US dollar.

USD/CAD sentiment - 59% short

Last week's sentiment: 72% short

13% more traders are long USD/CAD after the pair moved 100 pips lower from Thursday's highs. Last Thursday, USD/CAD closed over 1.3650 for the first time since March.

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.