US Dollar Tumble Points to Bigger Decline
- EURUSD – Euro Likely Bottomed versus US Dollar
- GBPUSD – British Pound May Strengthen Further
- USDJPY – Japanese Yen Sentiment Warns of Turn
- USDCHF – Swiss Franc Outlook Improves
- USDCAD – Canadian Dollar Forecast to Rally
- GBPJPY – British Pound Expected to Fall versus JPY
Forex trading crowds have aggressively bought into US Dollar (ticker: USDOLLAR) declines against the Euro, and our sentiment-based trading strategies are now short USD and call for further EURUSD gains.
The Dow Jones FXCM Dollar Index has broken to monthly lows, and a run toward June lows near 10025 points to a EURUSD rally to its peak near $1.2700. Our sentiment-based trading strategies are now long Euros and short US Dollar against the Japanese Yen, Swiss Franc, Australian Dollar, New Zealand Dollar, and Canadian Dollar.
It will be critical to watch whether the USDOLLAR holds significant near-term support, as a USD breakdown targets the psychologically significant 10000 mark and April lows near 9820. Else we could see pairs such as the EURUSD, GBPUSD, AUDUSD, and NZDUSD rally to fresh highs while USDCHF, USDJPY, and USDCAD drop to further lows.
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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