FXCM/DailyFX Signals and Analysis

[Jason Rogers]

New Zealand Dollar Losses Forecast to Continue


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

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.

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.

 

[Jason Rogers]

All Eyes On FOMC for the Most Significant Rate Decision In Years


In his article today on DailyFX.com, currency analyst James Stanley talks about the much-awaited September FOMC meeting. Below are some highlights:

S&P 500 moving into symmetrical wedge as we near FOMC

Summary:

• Global stocks begin to stabilize ahead of FOMC, as volatility levels are on the rise to reflect the tumult of the past 3 weeks.
• Risk trends have aligned with the ‘risk on’ or ‘risk off’ themes based around global economic weakness.
• More attractive markets may currently be seen in long USD against emerging market currencies from Mexico or South Africa.

USD/MXN now trading at support with an attractive risk-reward ratio

 

[Jason Rogers]

Webinar: FOMC Setups We’ll be Trading as Yellen Takes Center Stage




Talking Points

• Weekly DailyFX Scalp Webinar archive covering featured setups
• Updated targets & invalidation levels
• Event Risk on Tap This Week

 

[Jason Rogers]

Critical Price Levels Ahead of Fed Decision


Below are the key price levels for the Euro and Yen identified by DailyFX quantitative strategist David Rodriguez in his Weekly Volume at Price report.

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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.

The Euro trades above key price and volume-based congestion levels at $1.12, and a hold above said level leaves near-term focus on a comparable price ceiling near $1.14. Extraordinarily choppy market conditions have nonetheless made it difficult to sustain a meaningful trading bias. We’ll watch for any major breakouts in either direction given the near-guarantee of major FX market moves in the days ahead.

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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.

The US Dollar continues to hold substantial volume-based support versus the Japanese Yen near the ¥119 mark, and indeed traders seem content to keep it in a narrow trading range ahead of the highly-anticipated US Federal Reserve interest rate decision on September 17. Near-term resistance remains 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.

 

[Jason Rogers]

FOMC Scenario Analysis for Dollar and Equity Markets

According to the September Fed Funds futures contract, the market is pricing in little probability of a hike by the central bank at Thursday's meeting. That discount likely takes some of the pain out of a dovish outcome for the Dollar.

However, it also leverages the 'surprise' of a hike and could drive the currency back to fresh 12-year highs. John Kicklighter analyzes possible FOMC-related scenarios for the Dollar and equity markets in today's strategy video.

 

[Jason Rogers]

SSI Snapshots of Retail Positioning Heading into FOMC

The chart below shows the latest readings from the SSI Snapshots indicator heading into this afternoon's all important FOMC rate decision.

The Speculative Sentiment Index (SSI) is a contrarian indicator which means if retail traders are net short a given currency pair (like they are for EUR/USD with 1.59 short positions for each long) then that is a bullish indicator for EUR/USD.

Given the strong market moving implications of the FOMC announcement, these SSI Snapshots can be used to anticipate how much follow through a given market reaction may have to the announcement.

For example, in the immediate aftermath of the FOMC release, if EUR/USD starts to move up, then it's possible such a move may have more follow through, since traders will have to cover their short positions. By contrast, a move downwards in EUR/USD may be muted or quickly reversed as traders who are already short take profits.

 

[Jason Rogers]

EUR/USD Post-Fed Weakness Favored as Bullish Formations Unravel



Talking Points:

• EUR/USD Weakness Persists Ahead of ECB Rhetoric, Slowing PMI’s.
• USD/JPY Bearish RSI Momentum Remains in Focus Amid Bets for Additional BoJ Easing.
• USDOLLAR Continues to Carve Bearish Formation Following Cautious Fed.

 

[Jason Rogers]

EUR/USD Monthly Open Range in Focus Following ECB Rhetoric



Talking Points:

• EUR/USD Preserves Long-Term RSI Formation Even as ECB Endorses Dovish Outlook.
• NZD/USD Fails to Retain Monthly-Opening Range Ahead of New Zealand Trade Report.
• USDOLLAR Clears Topside Targets & Eyes September High Ahead of Durable Goods Orders.

 

[Jason Rogers]

British Pound Forecast to hit Further Lows


Retail forex traders remain aggressively long the British Pound versus the US Dollar, and a contrarian view of crowd sentiment leads us to believe that a test of key GBP/USD lows remains likely.

The number of open long positions outnumber those short by 2.4 to 1; 71% of open positions are long.

 

[Jason Rogers]

GBP/USD - May Low on the Radar Ahead of BoE Carney Speech



Talking Points

• GBP/USD Eyes May Low (1.5088) Ahead of BoE Governor Carney’s Speech.
• Euro September Opening-Range Remains in Focus Ahead of Slowing Euro-Zone CPI.
• USDOLLAR Holds Previous Day’s Range Despite Upbeat Consumer Confidence.