GBP/USD sentiment flips from long to short

Forex sentiment update

This past week, major US dollar pairs all experienced similar price movements. Last Thursday, markets saw large swings in favor of USD, which has been lost incrementally in the five trading days since.

Sentiment in GBP/USD has changed from 53% long to 52% short as the pair climbs back above 1.2700. Short sentiment in the pair was last seen in mid-July when prices were higher than 1.2900.

Price action in USD pairs could continue later this week as Non Farm Payrolls and other labor market data arrives Friday morning.

How client sentiment works

Client Sentiment shows the percentage of tastyfx 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 tastyfx'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.

EUR/USD sentiment - 50% long

Last week's sentiment: 60% long

After a downturn last Thursday to close under 1.0800, EUR/USD has gained over 100 pips to trade above 1.0900 midday Wednesday. Euro sentiment reflects the move upward with 10% fewer traders long the pair.

GBP/USD sentiment - 52% short

Last week's sentiment: 53% long

GBP/USD is trading in the same range as last Wednesday, around 1.2700, but a 148 pip slide last Thursday followed by four successive days of gains has caused sentiment to flip toward US dollar.

USD/JPY sentiment - 75% short

Last week's sentiment: 74% short

Japanese yen sentiment is relatively unchanged as the pair continues to trade above 146.00 this week. USD/JPY traded as high as 147.20 Tuesday morning before finishing the day lower at 146.16.

USD/CHF sentiment - 79% long

Last week's sentiment: 80% long

USD/CHF is back under 0.8800 after a brief stint above 0.8850 last week. Sentiment in the pair remains long as traders hope to move away from July lows toward early 2023 prices.

AUD/USD sentiment - 77% long

Last week's sentiment: 77% long

Australian dollar long sentiment is unchanged at 77% this week ahead of next week's interest rate decision. While rates are expected to hold at 4.1%, long traders will hope for any indication from the Reserve Bank of Australia that could help the pair return toward July prices.

USD/CAD sentiment - 67% short

Last week's sentiment: 66% short

USD/CAD hit a two-month high above 1.3600 on Friday. Even though the pair has given up over 75 pips of those gains, more than two thirds of traders remain short.

How to trade client sentiment

1. Open an account to get started, or practice on a demo account
2. Choose your forex trading platform
3. Open, monitor, and close positions on forex pairs

Trading forex requires an account with a forex provider like tastyfx. Many traders also watch major forex pairs like EUR/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.

You can help develop your forex trading strategies using resources like tastyfx’s YouTube channel. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.

Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.