Euro Forecast to Recover Against US Dollar on Forex Positioning
Thursday, 13 November 2008 14:28:15 GMT
EUR/USD Ratio: -1.29
Trading Forecast: Bullish
Forex Positioning in the Euro/US Dollar Pair
EURUSD – A strong jump in US Dollar long positions across the board suggests that the Euro may soon turn against the surging US Dollar. As recently as several weeks ago, we saw that forex trading crowds continued to buy into Euro/US Dollar tumbles. Yet the recent jump in Euro/US Dollar short positions shows that many are now trying to latch on to the clear downtrend—an occurrence that we often see towards the end of a strong trend. Indeed, the ratio of long to short positions in the EURUSD stands at -1.30 as nearly 57% of traders are short. Yesterday, the ratio was at 1.04 as 51% of open positions were long. The flip from net long to net short adds further weight to the bullish case, as we see sentiment has noticeably shifted. Short positions are 51.7% higher than yesterday and 78.8% stronger since last week. Our SSI-based trading signals have recently sold the Euro/US Dollar across two separate trading strategies.
Forex Traders Signal that US Dollar/Japanese Yen Could Recover
USD/JPY Ratio: 1.04Trading Forecast: Bearish
Forex Positioning in the US Dollar/Japanese Yen Pair
USDJPY – Positioning in the US Dollar/Japanese Yen pair shows that the forex trading crowd has stopped buying into USD/JPY declines—the first sign that the Japanese Yen could slow its recently impressive ascent. Indeed, we most often see that the majority of traders try to fade the ongoing trend, but long positions in the US Dollar/Japanese yen have actually fallen 28.1 percent since last week. When traders are net long but buying has dropped considerably, we have often seen a period of consolidation or even short-term reversals in trend. This suggests that the USD/JPY may range trade or bounce through near-term trading, but a drop in open interest makes it difficult to make forecasts with strong conviction through the near term. Monitor our SSI-based USD/JPY trading strategies on DailyFX+.
US Dollar/Swiss Franc Positioning Forecasts Further Strength
USD/CHF Ratio: -1.89
Trading Forecast: Bullish
Forex Positioning in the US Dollar/Swiss Franc Pair
– The ratio of long to short positions in the USDCHF stands at -1.86 as nearly 65% of traders are short. Yesterday, the ratio was at -2.29 as 70% of open positions were short. In detail, long positions are 16.3% higher than yesterday and 10.4% weaker since last week. Short positions are 5.6% lower than yesterday and 5.0% stronger since last week. Open interest is 1.1% stronger than yesterday and 38.4% below its monthly average. The SSI is a contrarian indicator and signals more USDCHF gains.
Jump in British Pound/US Dollar Sales Suggests Turn Imminent
GBP/USD Ratio: -1.47Trading Forecast: Bullish
Forex Positioning in the British Pound/US Dollar Pair
GBPUSD –The forex trading crowd has, perhaps unexpectedly, accurately forecasted continued British Pound/US Dollar declines through the past two months of trading. We have most often seen crowds attempt to buy into strong downtrends, but that has not been the case as of late. This dynamic has admittedly has decreased the effectiveness of our SSI as a forecasting tool for the GBP/USD. That being said, we do see that selling interest has actually picked up on the British Pound against the US Dollar, and many traders may be attempting to latch on to the final stages of recent GBP/USD tumbles. Short positions are 19.1% higher than yesterday and 4.7% stronger since last week. The strong jump in short interest suggests that we may see the GBP/USD turn through near-term trade, but again, our confidence in said forecast is low due to sustained selling interest through recent GBP/USD tumbles. Discuss the British Pound with other traders in our forex forum.
Canadian Dollar May Lose Further Against US Dollar
Trading Forecast: Bearish
Forex Positioning in the US Dollar/Canadian Dollar Pair
USDCAD – Traders continue heavily net-long the US Dollar against the Canadian Dollar, but a sudden jump in short positions suggests that a turn in sentiment will bring a shift in forecasts on the USD/CAD pair. The ratio of long to short positions in the USDCAD stands at 2.25 as nearly 69% of traders are long. Typically such sentiment extremes tell us that the US Dollar may decline against its Canadian counterpart, but we likewise see that short positions have actually jumped 16.0 percent overnight. When forex trading crowds are net-long but begin to sell the USD/CAD, we often see a USD/CAD rally through subsequent trade. Tell us and other traders what you think in our forex forum.
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