US Dollar Breakout is Only the Beginning
- EURUSD – Euro Forecast to Fall Towards $1.1875
- GBPUSD – British Pound Expected to Weaken Further
- USDJPY – Japanese Yen Outlook Remains Bullish
- USDCHF – Swiss Franc Forecast to fall Against USD
- USDCAD – Canadian Dollar Predicted to Weaken
- GBPJPY – British Pound Outlook Bearish versus Japanese Yen
Retail forex trading crowds have aggressively sold into US Dollar (ticker: USDOLLAR) rallies against the Euro and British Pound. Such one-sided sentiment gives contrarian signal that the EURUSD and GBPUSD may fall to fresh lows.
The Dow Jones FXCM Dollar Index now trades at monthly highs as the Euro falls to fresh multi-year lows, and our proprietary retail forex-based Speculative Sentiment Index gives reason to expect further USD strength. Indeed, our technical forecast predicts that the USDOLLAR targets multi-year peaks on the broader Greenback rally.
We use our proprietary SSI data as a contrarian indicator. If crowds are aggressively long, price can and often will head in the opposite direction and trade lower. Our sentiment-based strategies have accordingly bought into USD strength against the Euro, British Pound, Swiss Franc, Australian Dollar, New Zealand Dollar, and Canadian Dollar. We expect the US Dollar may continue to strengthen through near-term trading.
How do we interpret and trade with the SSI? Watch an FXCM Expo Presentation that explains the SSI.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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