News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Euro Reversal Against US Dollar Seems Imminent

Euro Reversal Against US Dollar Seems Imminent

David Rodriguez, Head of Product
ssi_eur-usd_body_Picture_7.png, Euro Reversal Against US Dollar Seems Imminent

Retail FX trading crowds remain steadily long Euros against the US Dollar (ticker: USDOLLAR) as the EURUSD trades to fresh lows, and a contrarian view of crowd sentiment favors further declines. Crowds first turned net-long as the pair crossed below the $1.25 mark, but it serves to note that total long interest has fallen while short selling is on the rise—down 15 percent and up 18 percent since last week, respectively.

We often see important crowd capitulation at the end of major trends; our proprietary Speculative Sentiment Index data will often show that traders will go from net-long to net-short at major turning points. The fact that there are still 1.2 traders long for every short shows that we have not yet reached that point. Yet a flip in the SSI would warn of a near-term reversal.

Extremely one-sided speculative positioning warns that a deleveraging across financial markets could force significant Euro strength. Our SSI has begun showing the first signs that a reversal may be imminent, but timing the turnaround remains extremely difficult.

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

To receive the Speculative Sentiment Index and other reports from this author via e-mail, send a message with subject line “Distribution List” to drodriguez@dailyfx.com

Meet the DailyFX team in Las Vegas at the annual FXCM Traders Expo, November 2-4, 2012 at the Rio All Suite Hotel & Casino. For additional information regarding the schedule, workshops and accommodations, visit the FXCM Trading Expo website.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES