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Retail Crowds Remain Long US Dollar - Time to Sell?

Retail Crowds Remain Long US Dollar - Time to Sell?

David Rodriguez, Head of Product

EURUSD Euro Sentiment Warns Against Buying Strength

GBPUSD Pound to Remain Resilient but Breakout Unlikely

USDJPY Japanese Yen Offers Attractive Range Trading

USDCHF Swiss Franc Outlook Favors Strength

USDCAD Loonie Forecast Warns Against Chasing Strength

GBPJPY British Pound Likely to Fall Versus Yen

Retail FX crowds remain long the US Dollar (ticker: USDOLLAR) against the Euro, and going against the crowd means buying into EURUSD strength. Yet exceedingly quiet conditions ahead of a highly-anticipated Fed address in Jackson Hole warns against taking aggressive trades.

ssi_table_story_body_Picture_5.png, Retail Crowds Remain Long US Dollar - Time to Sell?

Crowds continue buying the US Dollar against the Euro, British Pound, Japanese Yen, Swiss Franc, and Canadian Dollar—normally a crystal-clear signal for us to favor further USD weakness. Yet it’s critical to note that retail traders tend to do well in times of exceedingly low market volatility, and indeed our retail sentiment-based trading strategies have mostly underperformed with FX volatility near five-year lows.

It remains critical to watch for any and all surprises in Fed Chairman Ben Bernanke’s address at the Jackson Hole Economic Policy Symposium and its implications for the US Dollar. Yet we’ll need to see a jump in volatility expectations before going against the crowd and selling into USD weakness.

ssi_table_story_body_Picture_6.png, Retail Crowds Remain Long US Dollar - Time to Sell?

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

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; Contact David via Twitter at http://www.twitter.com/DRodriguezFX

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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