The sentiment in forex changes so quickly and unexpectedly and we have witnessed such market sentiment turnarounds quite a few times recently. For instance, the Buck has enjoyed some great times after Trump´s election but since last weekend the sentiment has completely shifted.
Nothing has changed for the USD. The only important forex event which might have had a say in the sentiment turnaround was the Italian constitutional referendum where the pro EU PM Renzi won his last battle and probably the war, as he handed his resignation yesterday and will probably never get back to mainline Italian politics.
That would be a negative event for the Euro and positive for the Buck. But only a short-lived tumble, the Euro put up an impressive reversal which by the look of it seems like we´re not getting back to the 1.05 support level anytime soon.
The strange thing is the USD weakness. Yes, the Euro reversed and has gained more than three cents since Sunday evening at the Tokyo session open, but why has all this turned to be so negative for the USD?
First of all, EUR/USD sellers have closed their sell positions from higher up, probably around 1.12-13 amid profit taking. This has turned into a broad USD selling as forex traders take profit on all USD long position on other USD pairs.
So, there´s nothing in particular for this USD bashing, but market sentiment. These quick sentiment turnarounds are dangerous because you never see them coming, but they also present us with some good long term trading opportunities, one of which is selling EUR/USD. But, we´ll conduct a thorough analysis of this forex pair in one of our updates later today.
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