US Dollar Targets Lows versus Euro as Forex Sentiment Favors Losses
A major US Dollar (ticker: USDOLLAR) break against the Euro, British Pound, and Japanese Yen warns that the Dow Jones FXCM Dollar index may trade on to fresh yearly lows. Our retail forex trading crowd sentiment indicator likewise calls for USD weakness.
Forex trading crowds have bought aggressively into US Dollar weakness, and today’s major break lower in the Dow Jones FXCM Dollar Index suggests this may be the move necessary to bring volatility back to major FX pairs.
As it stands we are looking to sell into any US Dollar bounce versus the Canadian Dollar, Euro, British Pound, and even the Japanese Yen. How far could the USD drop? A major break below major congestion support for the Dow Jones FXCM Dollar Index leaves next major support at Year-to-date lows. Such a USDOLLAR move would likely push the EURUSD towards February highs near $1.35.
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--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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