US Dollar Set to Lose as Traders Far too Willing to Buy

2013-03-21 15:00:00 David Rodriguez, Head of Product

Our sentiment-based strategies have sold the US Dollar (ticker: USDOLLAR) against the Aussie and GBP; a clear shift in sentiment leaves us in favor of further Greenback weakness.

View individual currency sections:

EURUSD - Euro’s Failure to Hold Lows Leaves Risks to Topside

GBPUSD - Buying British Pound Attractive for Three Key Reasons

USDJPY - Japanese Yen Outlook Uncertain as Traders Sell

XAUUSD - Gold May Rally Further as Crowds Go in Opposite Direction

SPX500 - Fresh Highs in SPX500 Seem Likely as Crowds Aggressively Short

AUDUSD - Australian Dollar Targets $1.05 as Crowds Happy to Sell

Weekly Summary of Forex Trader Sentiment and Changes in Positioning

ssi_table_story_body_Picture_12.png, US Dollar Set to Lose as Traders Far too Willing to Buy

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.