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Crowds Show Euro Likely to Test 1.3550 Against Fast-Falling Dollar

By , Quantitative Strategist
09 February 2012 16:58 GMT

ssi_table_story_body_Picture_5.png, Crowds Show Euro Likely to Test 1.3550 Against Fast-Falling Dollar

Retail FX trading crowds have continued to buy into US Dollar (ticker: USDOLLAR) declines against the Euro, British Pound, Swiss Franc, and Canadian Dollar. We see little reason to alter our calls for further USD weakness across the board.

Crowds turned short the Euro against the US Dollar when the EURUSD pair crossed above $1.27 and have continued to sell. The next significant Euro/US Dollar resistance marker suggests it could rally to $1.3550 before a major pullback. We see similar stories across other USD pairs, and indeed our retail FX sentiment-based forecasts line up well with FX Options and Futures positioning analysis.

We will keep a close eye on the Dow Jones FXCM Dollar Index for any signs of potential reversal. Yet the Dollar Index targets its November lows on a recent break of support; we remain bearish until further notice.

View an FXCM Expo presentation on the Speculative Sentiment Index for better understanding on how we use it in our trading.

ssi_table_story_body_Picture_6.png, Crowds Show Euro Likely to Test 1.3550 Against Fast-Falling Dollar

How do we interpret the SSI? Watch an FXCM Expo Presentation that explains the SSI.

--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com

To receive the SSI via e-mail and other reports from author David Rodríguez, e-mail subject line “Distribution List” to drodriguez@dailyfx.com

Contact David via Twitter at http://www.twitter.com/DRodriguezFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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09 February 2012 16:58 GMT