US Dollar Set to Lose as Traders Far too Willing to Buy
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Weekly Summary of Forex Trader Sentiment and Changes in Positioning
Retail forex traders are now net-short the British Pound against the US Dollar for the first time since January, and our sentiment-based Momentum2 strategy first bought at $1.4918 then at $1.5137. The same system likewise bought the Australian Dollar from $1.0296, and the overall shift in sentiment leaves us in favor of further short-term USD weakness.
It should come of little surprise that we similarly favor Gold and SPX500 gains—both are priced in US Dollar terms. Indeed, the only pair in which we have a more nuanced Dollar bias is the USDJPY. That said, our SSI-based forecasts have been less useful for the Yen through recent price action and we’ll need a clearer shift in crowd sentiment before taking a bias with real conviction.
Download eight years’ worth of SSI data via this link.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.