I’ve made big profits going long the euro

Betting on a rising euro has proved profitable trade, says John C Burford. Now the market looks set to go the other way.

In my post on 1 May ("Forget the doom and gloom, the euro's on the up"), I predicted a euro rally. Sure enough, the EUR/USD cross has rallied from 1.12 at the beginning of May to the current 1.1450 area.

I want to examine whether the market has done enough to correct the excessive bearish euro sentiment that prevailed at the 1.0460 low on 13 March. Such a correction is necessary before the euro can decline again.

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(Contracts of EUR 125,000)Row 0 - Cell 1 Row 0 - Cell 2 Row 0 - Cell 3 Open interest: 439,122
Commitments
43,333222,3098,386345,101127,933396,820358,62842,30280,494
Changes from 05/05/15 (Change in open interest: -10,132)
-6,783-17,934-1,3871,12011,863-7,050-7,458-3,082-2,674
Percent of open in terest for each category of traders
9.950.61.978.629.190.481.79.618.3
Number of traders in each category (Total traders: 233)
5390325260122166Row 8 - Cell 7 Row 8 - Cell 8

John is is a British-born lapsed PhD physicist, who previously worked for Nasa on the Mars exploration team. He is a former commodity trading advisor with the US Commodities Futures Trading Commission, and worked in a boutique futures house in California in the 1980s.

 

He was a partner in one of the first futures newsletter advisory services, based in Washington DC, specialising in pork bellies and currencies. John is primarily a chart-reading trader, having cut his trading teeth in the days before PCs.

 

As well as his work in the financial world, he has launched, run and sold several 'real' businesses producing 'real' products.