Three out of five traders long EUR/USD

Forex sentiment update

USD pairs moved against the dollar Wednesday ahead of Fed Chair Powell's address in Jackson Hole on Friday. With ECB President Lagarde also speaking on Friday, traders will likely look to EUR/USD for price action at the end of the week. Euro sentiment has gained this week to 60% as the euro continues to trade below 1.0900 against US dollar.

EUR/USD historical prices

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 - 60% long

Last week's sentiment: 57% long

EUR/USD has closed below 1.0900 almost every day in the past week causing more traders to take long positions. While the pair has fallen over 250 pips in the past month, it has spent more time under 1.0900 than over in 2023.

GBP/USD sentiment - 53% long

Last week's sentiment: 52% long

British pound sentiment remains fairly split as the pair continues to trade under 1.2800 throughout August. Coming off highs over 1.3100 in July, the pair could either return higher or sink towards 2023 lows under 1.2000.

USD/JPY sentiment - 74% short

Last week's sentiment: 75% short

This week USD/JPY has fallen over 100 pips from last weeks 2023 highs to trade under 145.00 once again. Roughly three out of four traders still believe the pair can fall further towards the long-term mean.

USD/CHF sentiment - 80% long

Last week's sentiment: 81% long

USD/CHF has spent the past week oscillating around 0.8800 and sentiment remains heavily long US dollar. Traders will look to an interest rate decision from Switzerland on September 1st for an updated outlook on monetary policy.

AUD/USD sentiment - 77% long

Last week's sentiment: 83% long

Austrailian dollar has risen almost 100 pips against USD week-over-week as the pair nears 0.6500. Still far from July highs, the majority of traders are long AUD.

USD/CAD sentiment - 66% short

Last week's sentiment: 63% short

USD/CAD has fallen three conscutive days after climbing over 300 pips since August 1st. However, short sentiment grows as more traders believe the recent fall will continue into a larger reversal.

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.