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Euro Reversal Versus US Dollar Seems Imminent

Euro Reversal Versus US Dollar Seems Imminent

David Rodriguez, Head of Product

EURUSDEuro Reversal Against US Dollar Seems Imminent

GBPUSDBritish Pound Forecast to Rally Further

USDJPYJapanese Yen Sentiment Extreme

USDCHFSwiss Franc Outlook Remains Bearish

USDCADCanadian Dollar Forecast to Strengthen

GBPJPYBritish Pound Expected to Fall versus JPY

Watch a video guide on the Speculative Sentiment Index from our FXCM Expo

ssi_table_story_body_Picture_5.png, Euro Reversal Versus US Dollar Seems Imminent

Retail forex speculators have bought into recent US Dollar (ticker: USDOLLAR) declines against the Euro, British Pound, Japanese Yen, and Canadian Dollar—warning that the USD has further room to fall.

The Dow Jones FXCM Dollar Index has recently broken to fresh July lows, and indeed our technical forecast for the USD calls for further short-term weakness. The USDOLLAR is a measure of the US currency against the Euro, Australian Dollar, British Pound, and Japanese Yen. A technical breakdown warns of EURUSD, AUDUSD, and GBPUSD gains as well as USDJPY weakness.

Technical analysis studies aside, recent shifts in retail trader sentiment warns that the US currency may indeed have further room to fall. Our proprietary Speculative Sentiment Index data shows that there are 1.2 traders long EURUSD for every one long. Yet long positions have fallen 15 percent since last week while shorts are up 19 percent. An SSI flip to net-short EURUSD would give clear contrarian signal that the Euro may have set an important bottom.

ssi_table_story_body_Picture_6.png, Euro Reversal Versus US Dollar Seems Imminent

--- 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.

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