US Dollar Eyes Declines into Final Days of 2011
- EURUSD – Euro Forecast Bearish, but Sharp Declines Unlikely
- GBPUSD – British Pound Could Strengthen versus USD, Euro
- USDJPY – Yen Outlook Unclear on Mixed Sentiment
- USDCHF – Swiss Franc Shows Bullish Outlook
- USDCAD – Canadian Dollar Forecast to Appreciate
- GBPJPY– British Pound Declines May Continue vs. JPY
Forex trading crowds have scaled back US Dollar (ticker: USDOLLAR) short positions, and a moderation in sentiment suggests the Euro and other currencies could bounce off of recent lows into the final days of the trading year.
Trading crowds have aggressively bought the US currency against the British Pound as the GBPUSD reverses off of recent lows, and the SSI gives contrarian signal that the USD could continue lower on the shift in crowd sentiment.
Speculators quite often close positions into the illiquid final weeks of the year and start of the New Year. According to most recent FX Options and Futures data, speculators were heavily net-long the USD. We could see the Greenback slump if leveraged traders cover their long positions.
View an FXCM Expo presentation on the Speculative Sentiment Index for better understanding on how we use it in our trading.
How do we interpret the SSI? Watch an FXCM Expo Presentation that explains the SSI.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
To receive the SSI via e-mail and other reports from author David Rodríguez, e-mail subject line “Distribution List” to firstname.lastname@example.org
Contact David via Twitter at http://www.twitter.com/DRodriguezFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.