Speculative traders get bullish

I'm still of the opinion that the magnitude of the change in speculative positions is not reflected in the change in the euro. In other words, sentiment has swung from extremely negative to bullish, but the euro should be higher; it remains well below it's late 2009 highs.

As the charts below show, the dollar index, of which the euro is almost 60%, failed to break its early 2009 crisis high. It is seeing higher lows, but the 74 area is very important. A drop below would signal the end of the intermediate term U.S. dollar rally.

However, the euro (FXE) is more than half of the index, and its chart is much worse. It shows lower highs and lower lows, a downtrend that has yet to be broken.

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