Forex trading crowds have sold into Dollar strength versus the Japanese Yen and other counterparts – this could be the start of a US Dollar turnaround.
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Weekly Summary of Forex Trader Sentiment and Changes in Positioning
Our retail forex trader sentiment sample shows clear risk of further US Dollar weakness versus the Euro, but key signs of turnaround in the Dow Jones FXCM Dollar Index (ticker: USDOLLAR) suggests the Greenback may gain more broadly. Where does this leave us?
Our Speculative Sentiment Index measures what proportion of retail traders are long and short on key currency pairs. Our sentiment-based trading strategies most often go against the crowd—if everyone’s buying, we prefer to sell and vice versa.
As things stand, most traders are buying into dollar weakness against the Euro—leaving us in favor of EURUSD gains. Elsewhere however, more traders have sold into USD strength. We see this as early sign of short-term turnarounds in the GBPUSD, Gold prices, and other key prices.
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--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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