Retail FX Crowd Remains Long USD, JPY SSI At Extremes
- EURUSD – Crowd Sentiment Favors Additional Euro Gains
- GBPUSD – British Pound Set to Gain Further against US Dollar
- USDJPY – SSI at All-time High, Looking for USDJPY Bottom
- USDCHF – Swiss Franc Outlook Less Bearish
- USDCAD – Canadian Dollar Forecast to Continue Rally against US Dollar
- GBPJPY – British Pound Bias Remains Bearish versus Yen
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.
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 firstname.lastname@example.org; 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.