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EUR/USD Sentiment Analysis: Mixed Sentiment Climate Reveals

It has been some time since we looked at the retail sentiment climate for the EUR/USD.

I am currently using our Premium Analysis tool for the purpose of a contrarian insight.

As we know, most retail forex traders lose their money. In view of this, considering the opposite of their collective sentiment may sometimes yield additional opportunities.

EURUSD sentiment analysis

Sentiment Analysis

In the first chart, we can see the retail sentiment for the EUR/USD from our proprietary premium analysis. A figure above 50 shows a net long sentiment, while below 50 indicates a net short.

We can see that historically, the sentiment is inversely correlated to the value of the EUR/USD.

In our recent updates for our members, we had been emphasizing the somewhat flat nature of the sentiment, as circled above. We foresaw a high possibility of consolidation or ranging momentum instead of a continuation of the dominant trend. In hindsight, we were right, the recent bullish recovery stalled.

As we can see above on the sentiment chart, the sentiment climate is now in the middle. This suggests the absence of a dominant trend. This is in line with the current economic backdrop as both the USA and Europe are facing their own unique challenges. The market awaits to reward the better performing economy. If the sentiment goes into a net long trend, we may see a return of bearish pressure. Likewise, if the sentiment falls back below 50, the bullish recovery may continue. It is important to continue close observation.

In forex trading, it is never about trading a single chart. We concluded that the dynamics between price action, fundamental developments, technical indicators, and sentiments are interlinked in our decade of observation. That is why our forex forecasts and updates are based on a suite of indicators such as the sentiment climate.

Members should log in immediately to see the latest Retail Sentiment Analysis for EUR/USD, GBP/USD, AUD/USD, USD/CAD, USD/JPY, and USD/CHF.

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