Watch the USD at critical support
I remain in an uncomfortable position, as I remain longer-term bullish the US currency. Yet recent momentum underlines the danger of trying to buy the USD against fast-rallying major counterparts. In fact, our Speculative SEntiment Index currently shows that currency trading crowds remain heavily net-long the USD.
We use the SSI as a contrarian indicator, and current sentiment points to continued Greenback weakness. Yet SSI is typically most extreme at the turn, and indeed we see USDJPY at its most net-long since the pair bottomed in early February. This is hardly a guarantee of a substantive bounce, but it will be critical to watch how the USD reacts near significant support levels against major counterparts.
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