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EURUSD – The Euro likely set an important price and sentiment extreme as it reversed from the $1.3970 high, but subsequent consolidation in both the EURUSD and trader positions suggests losses may slow.
Trade Implications – EURUSD: Last week we argued that a material shift in retail FX trading crowd sentiment favored a similarly significant Euro reversal. And indeed the pair has held key highs.
Yet the lack of follow-through in both price and sentiment combined with extremely low forex volatility prices suggests that the pair may stick to its recent trading range. Our technical forecast remains short-term bearish as long as the pair remains below reaction highs at $1.3875.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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