US Dollar Tumbles and Our Data Shows it Could Fall Further

DailyFX

11 år ago

Our proprietary retail forex sentiment data suggests the USDJPY could fall further while the EURUSD targets key peaks. Our sentiment-based strategies are trading accordingly.

View individual currency sections:

EURUSD – Euro Poised to Test Key Highs

GBPUSD – British Pound Shows Signs of Life, Looks to Rally Further

USDJPY – USDJPY Forecast to test ¥97 as Japanese Yen Breaks Highs

Gold – Gold Prices Likely to Remain in Downtrend

SPX500 – Retail Sentiment Catches Near-Exact Top in the SPX – What Now?

AUDUSD – Australian Dollar Might Bounce, but Crowds Too Willing to Buy

Weekly Summary of Forex Trader Sentiment and Changes in Positioning

Our retail sentiment-based trading strategies can be very streaky—they spend a lot of time doing very well or very poorly and not much time in between. Past performance is not indicative of future results, but those winning streaks tend to occur on above-average forex market volatility.

Several weeks ago we highlighted a surge in volatility prices that suggested we were on the verge of major currency moves across the board. And though that surge initially left us in favor of US Dollar (ticker: USDOLLAR) strength, a more recent shift in market positioning suggests the Japanese Yen may be the best-performer through the foreseeable future.

Indeed, a USDJPY-short position is one of my favorite trading positions through the foreseeable future as the Dollar weakens across the board. All the while, our proprietary retail forex sentiment data leaves us in favor of continued USD weakness versus the Euro and British Pound (EURUSD and GBPUSD strength).

The clear risks of further stock market tumbles would normally leave me in favor of Dollar strength, but here’s why that correlation might prove less relevant through near-term trading.