fxcm speculative sentiment index

US Dollar Forecast to Rally versus Euro on Forex Sentiment

Thursday, 01 October 2009 13:25:21 GMT  |  David Rodriguez, Quantitative Strategist

EURUSD – Euro Forecast to Fall Against US Dollar
GBPUSD – British Pound Forecast to Lose Further
USDJPY – Japanese Yen Outlook Remains Bullish
USDCHF – Swiss Franc Forecast Turns Less Aggressive
USDCAD – Canadian Dollar Forecast to Gain Further
GBPJPY – Sentiment-based Bias Somewhat Unclear

While the SSI is available once a week on DailyFX.com, you can receive SSI readings twice a day in DailyFX Plus Forex Intraday Trading Signals

Recent shifts in retail FX sentiment increasingly point to a US Dollar reversal, and in fact the SSI is now giving a fairly clear signal to go short the Euro versus its US counterpart. Earlier this week, we pointed to extreme FX Futures and Options markets positioning and argued that the US Dollar set an important bottom on one-sided positioning. Though it is clearly premature to definitively say that the USD has set a base, strong shifts in crowd sentiment add further conviction to our call. In fact, long open interest in the EURUSD jumped 27% overnight while short open interest dropped 15%. This gives us fairly clear signal to go short EURUSD, and indeed one of our algorithmic SSI-based trading systems remains short from 1.4695.

 

 

Historical Charts of Speculative Forex Trading Positioning

EURUSD – The ratio of long to short positions in the EURUSD stands at -1.00 as nearly 50% of traders are short. Yesterday, the ratio was at -1.49 as 60% of open positions were short. In detail, long positions are 26.1% higher than yesterday and 14.5% stronger since last week. Short positions are 15.5% lower than yesterday and 15.6% weaker since last week. Open interest is 1.2% stronger than yesterday and 0.9% below its monthly average. The SSI is a contrarian indicator and the recent flip to neutral gives a strong signal to sell EURUSD.

 

GBPUSD – The ratio of long to short positions in the GBPUSD stands at 1.29 as nearly 56% of traders are long. Yesterday, the ratio was at 1.22 as 55% of open positions were long. In detail, long positions are 6.6% higher than yesterday and 25.2% weaker since last week. Short positions are 1.4% higher than yesterday and 51.9% stronger since last week. Open interest is 4.3% stronger than yesterday and 3.5% above its monthly average. The SSI is a contrarian indicator and signals more GBPUSD losses.

 

USDJPY – The ratio of long to short positions in the USDJPY stands at 2.98 as nearly 75% of traders are long. Yesterday, the ratio was at 2.99 as 75% of open positions were long. In detail, long positions are 1.5% lower than yesterday and 6.9% stronger since last week. Short positions are 1.2% lower than yesterday and 3.8% weaker since last week. Open interest is 1.5% weaker than yesterday and 2.0% below its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses.

 

USDCHF – The ratio of long to short positions in the USDCHF stands at 1.91 as nearly 66% of traders are long. Yesterday, the ratio was at 2.90 as 74% of open positions were long. In detail, long positions are 8.6% lower than yesterday and 32.8% weaker since last week. Short positions are 38.8% higher than yesterday and 18.7% stronger since last week. Open interest is 3.6% stronger than yesterday and 13.1% below its monthly average. The SSI is a contrarian indicator and signals more USDCHF losses.

 

USDCAD – The ratio of long to short positions in the USDCAD stands at 3.17 as nearly 76% of traders are long. Yesterday, the ratio was at 3.51 as 78% of open positions were long. In detail, long positions are 3.8% lower than yesterday and 31.7% stronger since last week. Short positions are 6.4% higher than yesterday and 39.8% weaker since last week. Open interest is 1.5% weaker than yesterday and 0.7% below its monthly average. The SSI is a contrarian indicator and signals more USDCAD losses.

 

GBPJPY – The ratio of long to short positions in the GBPJPY stands at 1.34 as nearly 57% of traders are long. Yesterday, the ratio was at 1.22 as 55% of open positions were long. In detail, long positions are 1.5% higher than yesterday and 46.1% weaker since last week. Short positions are 8.1% lower than yesterday and 68.0% stronger since last week. Open interest is 2.8% weaker than yesterday and 15.2% below its monthly average. The SSI is a contrarian indicator and signals more GBPJPY losses.

 

How do we interpret the SSI? Read our brand-new Primer on the SSI.

Follow up-to-the-minute updates on the SSI through DailyFX+ and our newest product: The Forex Stream

Have any further questions about the SSI and forex positioning data? Ask the author David Rodríguez on our forex forum.

We love getting feedback on our reports. Tell us how we’re doing: E-mail the author of this report at drodriguez@dailyfx.com.


 

 

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