At the start of every trading week, we update Client Sentiment levels - percentage of IG clients with long or short positions - for major forex pairs like EUR/USD, USD/JPY, and more.
Most major currencies moved to the middle of their year-to-date ranges against US dollars in the last week of trading as sentiment around them edged closer to 50/50. Australian dollars, however, fell to lows on the year, and AUD/USD sentiment shot up to 77% long. Traders seem to be content trading the range - getting long at lows and short at highs - begging the question if AUD/USD will be able to bounce back from 0.66.
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.
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EUR/USD - 50% Short
Last week's sentiment: 61% Short
Euro sentiment fell back to 50/50 as EUR/USD went from near 1.10 down to 1.08; sentiment got to 61% short last week while the major pair made its run toward 1.10, a level which has not been surpassed for more than a day or two in the last year of trading. Traders seem content to trade the range in EUR/USD - 1.06 to 1.10.
GBP/USD - 50% Short
Last week's sentiment: 65% Short
British pound price action and sentiment continues to track with those of the euro - GBP/USD fell from its recent 1.25 high as sentiment went from short to 50/50. Much for the trade has been between 1.20 and 1.25 in 2023, and traders seem to be shifting from long to short at either ends of that range, respectively.
USD/JPY - 63% Short
Last week's sentiment: 57% Short
The falling sense of fear in the US economy has correlated to a rise in USD/JPY, which has now coincided with a building short position in the popular pair among IG traders. USD/JPY traders are 63% short with the market only back to 134, so it will be interesting to see sentiment if 135 and beyond can be reached.
AUD/USD - 77% Long
Last week's sentiment: 54% Long
While the US dollar has appreciated against most major currencies in the last week, Australian dollar seems to have caight the worst of it. AUD/USD has fallen back to 0.66 - the low since November 2022 - as it gains more long positions among IG traders. Sentiment is rarely seen beyond 80% in one direction, but it could be reached here if 0.66 is breached.
USD/CAD - 50% Short
Last week's sentiment: 64% Long
USD/CAD is back to 1.35, and the major pair's sentiment is back to 50/50. The market gained some long interest last week amid USD/CAD's flirtation with 1.34, but sentiment on the Canadian dollar seems centered at these current levels.
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