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Retail FX Crowd Remains Long USD, JPY SSI At Extremes

Retail FX Crowd Remains Long USD, JPY SSI At Extremes

Christopher Vecchio, CFA, Senior Strategist

For another week, retail forex traders remain long the US Dollar against a basket of major currencies, in particular against the British Pound and the Japanese Yen. We do note, however, that sentiment has deteriorated towards the Euro, with traders shifting their allocations to reflect a slightly less bearish bias towards the EURUSD.

With significant fundamental risk on the horizon, it is likely that positioning changes dramatically over the next week. We are most intrigued by the USDJPY bias set forth, which given the SSI, is calling for further losses; but given the exceptionally stretched ratio (which has signaled turns in the past), we are instead looking for a USDJPY bottom in the coming weeks.

ssi_table_story_body_Picture_8.png, Retail FX Crowd Remains Long USD, JPY SSI At Extremesssi_table_story_body_Picture_7.png, Retail FX Crowd Remains Long USD, JPY SSI At Extremes

How do we interpret and trade with the SSI? Watch an FXCM Expo Presentation that explains the SSI.

--- Written by Christopher Vecchio, Currency Analyst 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 cvecchio@dailyfx.com; Contact Chris via Twitter at http://www.twitter.com/CVecchioFX

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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