Dollar Forecast Improves, SSI Shows it May Rally Across the Board
The US Dollar has held key support levels versus the Euro, Sterling, and Japanese Yen. David Rodriguez's weekly summary of forex trader sentiment (SSI) and changes in position shows why it might continue higher against most major FX counterparts with the exception of the Euro.
Past performance is not necessarily indicative of future results.
Retail FX crowds remain steadily long the Australian Dollar versus its US namesake with the Speculative Sentiment Index (SSI) showing there are over 3 long positions for every short position. A contrarian view of ‘herd’ sentiment leaves us with a similarly steady bearish trading bias.
Past performance is not necessarily indicative of future results.
AUD/USD currently trades just above key support at $0.7250, and further breakdown offers little in the way of concrete support until the psychologically significant $0.7000 level.
Past performance is not necessarily indicative of future results.
The SSI Snapshots indicator from FXCMapps.com shown on the Trading Station chart above updates every second, so you have the most up-to-date sentiment info on the marketplace. And with convenient docking, you can position the indicator on any chart so it never gets in the way.
USD/CAD Posts 3rd Highest Volume Day in 2015 As Oil Plunges
From a pure volume perspective, high volume days that occur when the trend advances helps to validate the larger trend. This activity shows that market participants do not want to miss out on the move and would rather buy now before being forced to buy at worse prices later.
Real Volume indicator on Marketscope charts
Past performance is not necessarily indicative of future results
On the chart above, you can see volume has risen as the trend matures and last week’s move through the 2009 high aligned with the third highest volume day for 2015 further validating the probability of trend continuation.
Today's data releases are starting to cause a pick-up in volatility most notably the US ISM Non-Manufacturing report which came in at its highest level since 2005. Here's a look at the release over the past 10 years:
And the reaction from USD/JPY, briefly touches 125
Don't forget, there are still big releases on the economic calendar scheduled for both Thursday and Friday.
Chinese stimulus continues with devaluation of the Yuan
The Chinese Central Bank triggered the biggest one-day decline in the value of the Yuan in over 20 years.
Past performance is not necessarily indicative of future results.
In his article today on DailyFX.com, currency analyst James Stanley discusses how this Yuan devaluation has created a ripple-effect, with commodities and commodity currencies selling-off.
Inflation Figures Feed Speculation Between a Fed or BoE First Rate Hike
The graph below is from today's special report on DailyFX.com by chief currency strategist John Kicklighter:
Past performance is not necessarily indicative of future results.
It shows that, out of the major central banks, the Fed and the BoE are the most likely to raise rates in the near future particularly in light of the latest inflation figures which are discussed in Kicklighter's report.
Retail FX traders continue buying aggressively into Australian Dollar weakness, and a contrarian view of crowd sentiment leaves us in favor of selling into AUD declines. The majority of traders last turned net-long the AUD as it traded below $0.80 in May.
Weekly Summary of Forex Trader Sentiment and Changes in Positioning
Past performance is not necessarily indicative of future results.
Until we see a marked swing in the opposite direction we see little reason to change our long-standing bearish trading bias, and indeed any rallies are likely to be capped by significant volume-based resistance at $0.7400.
Total Buy Volume Executed, Total Sell Volume Executed, Net Volume Executed (Buy-Sell)
Length of bar indicates the sum of Buy and Sell volume.
Data source: FXCM Directional Real Volume indicator Past performance is not necessarily indicative of future results.
The Australian Dollar briefly broke to fresh lows versus the US Dollar before bouncing sharply, and the AUD/USD now trades at major volume-based resistance levels near $0.7400. Failure to close above would nonetheless leave focus on recent lows near $0.7250. A break above $0.7400 would instead target the bottom of a major volume-based congestion range near $0.7600.
US Dollar Breaks Key Support. Here are Levels We're Watching Next
The US Dollar has tumbled through significant support versus the Euro, Japanese Yen, and other majors. To see what levels are worth watching next for all major pairs, visit DailyFX.com
EUR/USD Total Buy Volume Executed, Total Sell Volume Executed, Net Volume Executed (Buy-Sell) Length of bar indicates the sum of Buy and Sell volume.
Data source: FXCM Real Directional Volume Indicator, Chart source: Prepared by David Rodriguez
Past performance is not necessarily indicative of future results.
The Euro surged beyond key resistance as it briefly broke to $1.17 versus the US Dollar, and the relative lack of further major resistance suggests risks remain for further advances. Support now starts at considerable volume-based congestion support near $1.14 and extends through $1.12. Resistance remains recent spike-highs at $1.17.
EUR/USD Posts Highest Volume Day in 2015 As Volatility Soars
On Friday, before the market shakedown, EUR/USD broke above the 200-day moving average for the first time since summer of 2014.
Past performance is not necessarily indicative of future results.
And it did so on high volume. This type of move favors follow-through.
Past performance is not necessarily indicative of future results.
From a pure sentiment perspective, where we look for aggregate retail positioning as a contrarian indicator, EURUSD has been flashing by signals from the 1.0808 bounce.
Past performance is not necessarily indicative of future results.
In the chart above, you can see the red bars showing retail open short positions largely outweigh retail open long positions, which favors further upside.
US Dollar Once Again in Control versus British Pound
Our retail FX trader data shows that the majority of traders remain long the British Pound versus the US Dollar, and a contrarian view of crowd sentiment leaves us focused on further short-term weakness.
Weekly Summary of Forex Trader Sentiment and Changes in Positioning
Past performance is not necessarily indicative of future results.
The US Dollar looks likely to resume its uptrend versus the British Pound. Here are the factors we’re watching.
Past performance is not necessarily indicative of future results.
Last week we noted that traders had previously turned net-short for the first time since May, and that served as signal that the pair could be at a key turning point.
Past performance is not necessarily indicative of future results.
That signal preceded a major break to the topside, but since then we’ve seen the pair break down and crowds have resumed buying.
COT-Smallest Short Position for Large Euro Traders in Over a Year
The COT Index is the difference between net speculative positioning and net commercial positioning measured.
A blue colored bar indicates that the difference in positioning is the greatest it has been in 52 weeks (bullish) with speculators selling and commercials buying. A red colored bar indicates that the difference in positioning is the greatest it has been in 52 weeks (bearish) with speculators buying and commercials selling.
Euro Daily Chart
Past performance is not necessarily indicative of future results.
Non-commercials tend to be on the wrong side at the turn and commercials the correct side. Right now, large commercial traders have the smallest short position in over a year meaning that they are bullish on the Euro.
Use of the index is covered in more detail in Jamie Saettele's article on DailyFX.com.
US Dollar in position to rally further versus AUD, GBP, and Gold
The latest weekly readings from the Speculative Sentiment Index (SSI) show the US Dollar remains in position to hit further highs versus the British Pound, Australian Dollar, and Gold prices.
Past performance is not necessarily indicative of future results.
US Dollar in Position to Rally versus Euro, Yen. Here are Key Price Levels
The US Dollar remains in control versus the Euro and Japanese Yen. In his Weekly Volume at Price Report on DailyFX.com, quantitative strategist David Rodriguez discusses the key levels he is watching.
EUR/USD Total Buy Volume Executed, Total Sell Volume Executed, Net Volume Executed (Buy-Sell) Length of bar indicates the sum of Buy and Sell volume.
Data source: FXCM Real Directional Volume Indicator
Past performance is not necessarily indicative of future results.
The Euro trades below key congestion levels at $1.12, and risks remain to the downside unless we see a significant move above the important price level. The psychologically significant $1.10 level remains the next logical target, while notable price and volume-based congestion near $1.09 offers subsequent support.
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USD/JPY Total Buy Volume Executed, Total Sell Volume Executed, Net Volume Executed (Buy-Sell) Length of bar indicates the sum of Buy and Sell volume.
Data source: FXCM Real Directional Volume Indicator
Past performance is not necessarily indicative of future results.
The US Dollar continues to hold substantial volume-based support versus the Japanese Yen near the ¥119 mark, and trading above keeps focus on near-term technical resistance at the recent reaction high of ¥121.60. A break above sees little in the way of substantial resistance until considerable volume-based congestion near ¥123.50.
The week before the Federal Reserve meets for its highly anticipated September policy meeting, the retail crowd is already scaling back long US Dollar exposure. Accordingly, our AUD/USD, EUR/USD, and GBP/USD forecasts have been neutralized ahead of what should be a tense week in the run up to the September 17 meeting.
Weekly Summary of Forex Trader Sentiment and Changes in Positioning
Past performance is not necessarily indicative of future results.
However, the ratio of long to short positions in NZD/USD stands at 2.27 as 69% of traders are long. Yesterday the ratio was 1.14; 53% of open positions were long. Long positions are 15.3% higher than yesterday and 5.0% above levels seen last week. Short positions are 42.0% lower than yesterday and 24.4% below levels seen last week.
Past performance is not necessarily indicative of future results.
The Speculative Sentiment Index (SSI) is a contrarian indicator to price action, so the fact that the majority of traders are long gives signal that the NZD/USD may continue lower. The trading crowd has grown further net-long from yesterday and last week. The combination of current sentiment and recent changes gives a further bearish trading bias.
