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Huge Week for Forex Markets, but Even Bigger Moves Coming Soon

By , Quantitative Strategist
16 May 2013 16:15 GMT

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:

EURUSD - Euro Breakdown is the Real Deal - We Like Selling

GBPUSD - Smart Money Bets on British Pound Weakness

EURJPY - Japanese Yen Trade Looks a Little too Obvious For Comfort

XAUUSD - Gold Price Declines Show No Signs of Slowing

SPX500 - SPX500 Seems Unstoppable, but Major Warning Signs Arise

AUDUSD - Australian Dollar Direction Couldn’t Be Any More Clear

Weekly Summary of Forex Trader Sentiment and Changes in Positioning

ssi_table_story_body_Picture_10.png, Huge Week for Forex Markets, but Even Bigger Moves Coming Soon

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)

ssi_table_story_body_Picture_11.png, Huge Week for Forex Markets, but Even Bigger Moves Coming Soon

ssi_table_story_body_1a.png, Huge Week for Forex Markets, but Even Bigger Moves Coming Soon

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

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16 May 2013 16:15 GMT