EURUSD – Euro Sold Following European Central Bank Decision
GBPUSD – British Pound Forecast turns Neutral versus US Dollar
USDJPY – Japanese Yen Forecast to Gain Further against USD
USDCHF – Swiss Franc Trading Bias Bullish on Sentiment
USDCAD – Canadian Dollar Outlook mixed against USD
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Forex trading crowds have aggressively sold the Euro against the US Dollar on the day, and fairly neutral rhetoric from the European Central Bank further fueled EURUSD sales. The shift in sentiment leaves our sentiment-based strategies long the Euro versus the US Dollar, but it will be critical to watch markets in the day ahead. Tomorrow’s US Nonfarm Payrolls report could bring further shifts in crowd sentiment, and a very recent drop in trader open interest suggests many have moved to the sidelines ahead of the report. It remains critical to watch forex price action in the day ahead.
Historical Charts of Speculative Forex Trading Positioning
EURUSD – Forex traders have sold the Euro aggressively following the European Central Bank interest rate decision, leaving the retail speculative crowd strongly bearish the EURUSD. The ratio of long to short positions in the EURUSD stands at -1.55 as nearly 61% of traders are short. In detail, long positions are 7.2% lower than yesterday and 10.2% stronger since last week. Short positions are 9.7% higher than yesterday and 5.3% weaker since last week. Said percentage jumped noticeably in the moments following ECB commentary on growth and interest rates. We typically take a contrarian view on crowd sentiment, and two of our automated SSI-based strategies have gone long the EURUSD. Yet it will be important to watch key fundamental developments in tomorrow’s infamous US Nonfarm Payrolls report.
GBPUSD – British Pound retail speculative positioning has become far less extreme through recent trade, as a sharp jump in short positions offsets the previously net-long crowd bias. The ratio of long to short positions in the GBPUSD stands at -1.13 as nearly 53% of traders are short. Yesterday the ratio was at 1.15 as 53% of open positions were long. We typically view a flip to net-short as a contrarian signal to buy. Long positions have fallen 8.5% overnight and 20.6% weaker since last week. Short positions are 18.8% higher than yesterday and a whopping 59.1% stronger on the week. One of our SSI-based strategies has taken a contrarian view of the recent sentiment shift and gone long the GBPUSD. Yet we remain wary of market choppiness and have limited conviction in said trade.
USDJPY – Our sentiment-based trading strategies remain aggressively short the US Dollar versus the Japanese Yen, as extremely one-sided crowd sentiment points to further losses in the USDJPY. The ratio of long to short positions in the USDJPY stands at 3.08 as nearly 76% of traders are long. Yesterday, the ratio was at 4.26 as 81% of open positions were long. In detail, long positions are 6.1% lower than yesterday and 17.3% stronger since last week. Short positions are 29.7% higher than yesterday and 22.6% stronger since last week. The very recent bounce in short positions moderates our otherwise aggressively bearish bias, but the overall trend remains lower for the USDJPY pair.
USDCHF – Our sentiment-based forex trading strategies remain aggressively short the US Dollar against the Swiss Franc, as one-sided crowd positioning points to further losses. The ratio of long to short positions in the USDCHF stands at 3.93 as nearly 80% of traders are long. Yesterday, the ratio was at 3.25 as 76% of open positions were long. In detail, long positions are 13.1% higher than yesterday and 5.9% stronger since last week. Short positions are 6.6% lower than yesterday and 20.8% stronger since last week. Open interest is 8.5% stronger than yesterday and 16.0% above its monthly average. The SSI is a contrarian indicator and signals more USDCHF losses.
USDCAD – A strong moderation in USDCAD crowd sentiment leaves our near-term trading bias effectively mixed, as one sentiment-based strategy is short while another has recently gone long. The ratio of long to short positions in the USDCAD stands at 1.48 as nearly 60% of traders are long. Yesterday, the ratio was at 1.27 as 56% of open positions were long. In detail, long positions are 7.6% higher than yesterday and 11.6% weaker since last week. Short positions are 7.8% lower than yesterday and 23.2% stronger since last week. The net-long crowd bias gives contrarian signal to go short, but a more recent moderation leaves short-term trading forecasts effectively mixed.
GBPJPY – Our sentiment-based forex trading strategies spent most of the week aggressively short the British Pound against the Japanese Yen, as one-sided crowd sentiment accurately forecasted further declines. Yet a more recent moderation actually leaves one automated strategy long, and our bearish bias has quickly moderated. The ratio of long to short positions in the GBPJPY stands at 1.29 as nearly 56% of traders are long. Yesterday, the ratio was at 2.02 as 67% of open positions were long. In detail, long positions are 16.9% lower than yesterday and 18.7% weaker since last week. Short positions are 30.3% higher than yesterday and 19.7% stronger since last week. Open interest is 1.3% weaker than yesterday and 20.9% above its monthly average. The SSI is a contrarian indicator and signals more GBPJPY losses, but the recent jump in short positions leaves scope for a further near-term bounce.
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