FxWirePro: Sharp decline in retail bullish bias suggests possibility of further rise in EUR/USD

The bulls might have a run further.

• Since last Wednesday, the euro has risen around 100 pips against the USD and currently trading at 1.139 against the dollar.
• A sharp drop in bullish sentiment among retail position strongly suggests that the euro could rise further.

Retail sentiment:

• The sentiment reports from IG Markets, which is a UK-based company providing trading in financial derivatives such as contracts for difference and financial spread betting, strongly suggest that yen is likely to decline against the USD.
• Retail positioning data from IG markets which is a UK-based company providing trading in financial derivatives such as contracts for difference and financial spread betting retail positions provide a glimpse to retail traders’ positions, which are largely used a contrarian indicator since retail positioning moves in opposite direction to market movements.
• Last week, on Wednesday, 71 percent of the retail positions were long on euro, while 29 percent were short.
• But today, long positions on the euro declined to just 52 percent. Euro has been rising as the long position declined. If the retail positioning turns net short on the euro, it is likely that the single currency would rise further.