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US Dollar Tumble Points to Bigger Decline

David Rodriguez

ssi_table_story_body_Picture_8.png, US Dollar Tumble Points to Bigger Decline
ssi_table_story_body_Picture_7.png, US Dollar Tumble Points to Bigger Decline

Forex trading crowds have aggressively bought into US Dollar (ticker: USDOLLAR) declines against the Euro, and our sentiment-based trading strategies are now short USD and call for further EURUSD gains.

The Dow Jones FXCM Dollar Index has broken to monthly lows, and a run toward June lows near 10025 points to a EURUSD rally to its peak near $1.2700. Our sentiment-based trading strategies are now long Euros and short US Dollar against the Japanese Yen, Swiss Franc, Australian Dollar, New Zealand Dollar, and Canadian Dollar.

It will be critical to watch whether the USDOLLAR holds significant near-term support, as a USD breakdown targets the psychologically significant 10000 mark and April lows near 9820. Else we could see pairs such as the EURUSD, GBPUSD, AUDUSD, and NZDUSD rally to fresh highs while USDCHF, USDJPY, and USDCAD drop to further lows.

How do we interpret and trade with the SSI? Watch an FXCM Expo Presentation that explains the SSI.

--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com

To receive the Speculative Sentiment Index and other reports from this author via e-mail, send a message with subject line “Distribution List” to drodriguez@dailyfx.com; Contact David via Twitter at https://www.twitter.com/DRodriguezFX

Meet the DailyFX team in Las Vegas at the annual FXCM Traders Expo, November 2-4, 2012 at the Rio All Suite Hotel & Casino. For additional information regarding the schedule, workshops and accommodations, visit the FXCM Trading Expo website.