Sentiment is usually backward looking and is incorrect so frequently that it is used by professionals as a counter indicator of market direction. Daniel Loeb
The Forex Exchange market is the worlds largest financial market with an estimate daily turnover of over $5T, which is more than 25 times bigger than the US equity market. Although the FX market to some extent seems to be irrational because they don't follow the interest rate differential as expected. This could indicate that investor psychology plays a significant role in exchange rates fluctuations and there are consistently empirical evidence which suggest that sentiment may be the key to understanding this apparent irrationality.
Each and every trader will always have an opinion about where the market should go, and everyone will have their own explanation as to why the market is doing what is doing. Sentiment may drive trades however sentiment does not always translate into actual trades, so at times it can be deceiving.
It is what people actually did in the stock market that counted - not what they said they where going to do" Jesse Livermore