What a difference a week makes. Retail FX traders went from buying aggressively into Dollar weakness to being universally short USD across the board. We like buying for that same reason.
View individual currency sections:
Weekly Summary of Forex Trader Sentiment and Changes in Positioning
Last week we wrote that traders remained short Euro, British Pound, and Japanese Yen against the downtrodden Greenback, but a substantive shift in sentiment and market conditions has effectively reversed our SSI-based forecasts.
We like buying the US Dollar across the board as volatility prices surge and retail traders do the opposite—particularly against the Australian Dollar and Swiss Franc.
And though we’ve previously spoken enthusiastically in favor of further Japanese Yen weakness (EURJPY, USDJPY strength), we might soon sing a different tune as warning signs become too difficult to ignore.
It’s been a big week for markets and key swings in retail forex sentiment warn even bigger moves are ahead.
(See the full SSI charts in the links above)
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--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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