A substantial shift in US Dollar (ticker: USDOLLAR) positioning versus the Australian Dollar and Japanese Yen suggests that the Greenback may continue higher.

View individual currency sections:

EURUSD - Euro Forecast to Rally as Crowds Sell

GBPUSD - British Pound Sentiment Warns of Further Weakness

USDJPY - Japanese Yen Forecast to Fall Further

USDCHF - Swiss Franc Outlook Remains Bullish

USDCAD - Canadian Dollar Trading Outlook Unclear

AUDUSD - Australian Dollar Forecast to Fall Further

ssi_table_story_body_Picture_11.png, Forex Analysis: Crowd Shift Favors Australian Dollar, JPY Weakness

In fact, retail trading crowds have now turned net-short the USDJPY for only the third time this year as the pair presses to fresh multi-year highs. A surge in AUDUSD long interest leaves retail traders net-long for the first time since mid-November and similarly favors US Dollar strength.

It is nonetheless critical to note that crowds remain heavily long the USD against the Euro and Swiss Franc—giving us mixed signals for the US currency. Yet recent shifts may be the start of much larger corrections, and we’ll keep an especially close eye on whether the USD trades higher to start the New Year.

ssi_table_story_body_Picture_12.png, Forex Analysis: Crowd Shift Favors Australian Dollar, JPY Weakness

--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com

To receive the Speculative Sentiment Index and other reports from this author via e-mail, sign up for his distribution list via this link.

New to FX markets? Learn more in our video trading guide.

Contact David via

Twitter at http://www.twitter.com/DRodriguezFX

Facebook at http://www.Facebook.com/DRodriguezFX