Last week was the first time the dollar has moved higher in the last five weeks and it was the biggest move to the upside for the dollar since the first week of the year.

Given these statements, you would have expected the sentiment towards the euro to change somewhat drastically.

There was a big change in the bullish and bearish sentiment toward the euro last week, but it wasn't in the direction you would have expected.

According to last week’s Commitment of Traders report, the large speculators added 23,000 contracts on the bullish side and the net short position shrank by 9,000 contracts.

What this suggests is that the rally in the dollar that started last week may last more than one week. It is also worth noting that the Dollar Index dropped down below the 73 level before last week’s rally. Back in 2008, the Dollar Index found support in the 70 to 72.50 range.

With increasing pessimism towards the dollar and strong technical support, we could see a substantial rally in the dollar during the coming months.