Aggressive US Dollar and Japanese Yen rallies have been met with similarly aggressive crowd selling, giving strong contrarian signal to buy into USD and JPY strength. In fact, the number of traders long the British Pound against the Japanese Yen grew a substantial 56 percent while the crowd long the GBP/USD grew by a similar 43 percent from last week. Though persistent strength increases the likelihood of short-term pullbacks, the tide has clearly turned in the previously-downtrodden US Dollar’s favor and it is likely to continue higher into the coming months’ trade. Shorter-term, our SSI suggests that traders should buy declines in the US currency.
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