FXCM/DailyFX Signals and Strategies

Key Reasons Why Japanese Yen Might Surge Further

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Emerging Market Turmoil Extends to AUD/USD, USD/JPY

USD/JPY Falls Back Below ¥103 as Weak Durable Goods Add Concern

Christopher Vecchio highlighted the data hurting the US Dollar today in his article on DailyFX.com:

1. Durable Goods Orders (DEC): -4.3% versus +1.8% expected, from +2.6% (m/m).
2. Durables ex Trans (DEC): -1.6% versus +0.5% expected, from +0.1% (m/m).

"Market participants are putting this data on the side of no additional QE3 tapering, at least at least in January based on the 'gut' reaction. The US Dollar has fallen against [the Japanese Yen] in the wake of the report."

USD/JPY 1-minute Chart: January 28, 2014 Intraday

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"We use our SSI (Speculative Sentiment Index) as a contrarian indicator to price action, and the fact that the majority of traders are long gives signal that the USD/JPY may continue lower."

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The SSI is reported every Thursday at DailyFX.com and twice every trading day inside DailyFX PLUS.

Watch for Fireworks on Fed Rate Decision



Talking points in this video:

1. Forex markets at critical points following Turkish and South African rate decision
2. All eyes turn to the US Federal Reserve for a critical interest rate decision
3. Follow all up-to-the-minute updates on our Forex Real Time News Feed

Dollar and Yen May Have Set Major Lows - Key Levels to Watch

Today's Thursday, which means the latest weekly update for the Speculative Sentiment Index (SSI) was just posted on DailyFX.com

Weekly Summary of Forex Trader Sentiment and Changes in Positioning

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A major shift in forex sentiment warns that the Dollar and Yen may have set significant lows versus the Euro. These are the critical price levels we’re watching.

Euro Forecast Turns Bearish Below $1.36

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Today’s move below the key $1.3600 level may be the start of a larger decline, and the shift in retail sentiment further warns that we may be at an important turning point.

Japanese Yen Could Accelerate Higher

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USD trades just above the critical ¥102.00 mark, and a move below could initiate the next leg of important USD/JPY weakness.

Euro Breaks Trendline, These 3 Factors Point to Further EUR/USD Losses

Yesterday, I mentioned that the EUR/USD "move below the key $1.3600 level may be the start of a larger decline, and the shift in retail sentiment further warns that we may be at an important turning point."

Euro Breaks to Multi-Month Lows and Trades Below Trendline Support
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Currently, EUR/USD is trading around 1.3500 making a strong case for a larger decline. In the 2-minute video below, DailyFX quantitative strategist David Rodriguez list 3 factors pointing to further EUR/USD losses.

Huge Week for Markets Warn of Big Dollar, Yen Moves

In his Weekly Strategy Outlook on DailyFX.com, quantitative strategist David Rodriguez says that traders are bracing "for big market moves on a week with three major central bank meetings and a highly-anticipated US Nonfarm Payrolls report.



"Forex volatility prices have jumped, favoring stronger market moves ahead

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"We see little option but to position ourselves for similarly large FX moves in the days ahead, and our volatility-friendly Breakout2 trading strategy could do well across Japanese Yen and US Dollar currency pairs in particular."

DailyFX Individual Currency Pair Conditions and Trading Strategy Bias
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You can automate the Breakout2 system on your FXCM account via the Mirror Trader platform. The same login and password you use on Trading Station will allow you to access Mirror Trader.

NZD/USD Rebound to Accelerate on Job Growth, Rate Hike Bets

In this video:

1. NZ Employment to Rise 0.6%, Jobless Rate to Slip to 6.0% (Lowest Since 2Q 2009)
2. Job Growth has Topped Market Forecast During the Last Three-Straight Quarter

USD/JPY Unable to Hold ISM Gains

The ISM Non-Manufacturing Composite print for January showed a slight uptick as the print came in at 54.0, beating estimates of 53.7 and the December figure of 53.0.

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Notably, the only component to decline MoM was in fact export orders- a possible indication of mounting pressure in global trade as the Baltic Dry Index presses lows not seen since last summer.

USD/JPY February 5, 2014 (5-Minute Chart)

The better than expected ISM figure helped lift the greenback, US Treasury yields and equities, but the move has proved short lived thus far.

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Momentum in USD/JPY price action has been slowing over the past half hour and- as has been the case over the past two weeks- Yen weakness continues to be short lived.

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The Breakout2 strategy from DailyFX PLUS is currently giving a signal to short USD/JPY at current levels based on readings from our Speculative Sentiment Index (SSI).

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Breakout2 and other DailyFX PLUS Trading Signals can be automated on your FXCM account via the Mirror Trader platform.

Weekly Summary of Forex Trader Sentiment and Changes in Positioning

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Crowd sentiment warns that the Japanese Yen and British Pound have turned versus the Dollar. Yet the Euro holds firm post-ECB. What are we trading?

In this video:

1. Retail FX crowd sentiment favors important USDJPY and GBPUSD reversals
2. The post-ECB surge warns against betting on further EURUSD weakness
3. Despite recent rallies, retail positions favor AUDUSD and Gold price weakness

Another Weak Jobs Report Sends USD/JPY to ¥102, EUR/USD to $1.3600

The January US labor market report was widely anticipated to check the soft December jobs figures, but no such development has occurred.

1. January NFPs miss badly: +113K versus +187K expected, from +75K (revised from +74K).
2. Two consecutive months of misses >60K.

In the first month after the Federal Reserve decided to wind down its QE3 program – and the first since the second $10B cut to QE3 – there is only hollow evidence that the US economy is able to stand on its own.

USD/JPY 1-minute Chart: January 10, 2014 Intraday

US yields have been hammered the past several weeks (bond prices increasing), and the weak jobs data initially provoked a further flattening of the yield curve (when bonds with longer duration see their yields decrease at a faster rate than the shorter-end of the yield curve).

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The drop in the US 10-year Treasury Note yield to 2.630% also dragged USD/JPY from near ¥102.50 ahead of the release to under 101.50.

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However, with the 10YY having rebounded back to as high as 2.675% at the time of this post, the USD/JPY has retraced nearly the entirety of its losses.

Speculative Sentiment Index

However, according to the latest SSI readings, the ratio of long to short positions in the USD/JPY stands at 1.68 as 63% of traders are long.

Since SSI is a contrarian indicator to price action, the fact that the majority of traders are long is giving a signal that USD/JPY may continue lower once more.

Dollar Near Important Levels versus Euro, GBP


Last week's sharply disappointing US Nonfarm Payrolls data left the US Dollar noticeably weaker across the board and through key price levels. In the video below, our Senior Technical Strategist highlights why several key USD levels will be critical to watch—particularly versus the Euro and British Pound.

We recently favored high-volatility trading strategies and our proprietary Breakout2 trading system. Yet the broader shift in market expectations pulls focus towards other systems. The trend-following Momentum2 remains attractive more generally with the important exception of some range-bound USD pairs.

DailyFX Individual Currency Pair Conditions and Trading Strategy Bias

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You can automate the Momentum2 and other DailyFX PLUS Trading Signals on your FXCM account via the Mirror Trader platform. The same login and password you use on Trading Station will allow you to access Mirror Trader.

Yellen Testimony Shakes "Risk-On" Currencies, Lifts Dollar and Yen

"Economic activity and employment will expand at a moderate pace this year and next, the unemployment rate will continue to decline toward its longer-run sustainable level, and inflation will move back toward 2 percent over coming years."

That's an excerpt from Janet Yellen's Congressional testimony today, her first since taking over from Ben Bernanke as Fed Chair. The prepared remarks may have already brought about some disappointment, shaping the potential for this event to be a "buy the rumor, sell the news" occurrence.


US Yields

US yields have been hammered the past several weeks (bond prices increasing), and the weak jobs data initially provoked a further flattening of the yield curve (when bonds with longer duration see their yields decrease at a faster rate than the shorter-end of the yield curve).

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However, the lack of new information in the prepared remarks has helped the US 10-year Treasury Note yield rebound above 2.700%.

USD/JPY 1-minute Chart: February 11, 2014 Intraday

With the 10YY having eased back near 2.698% at the time this report, was written, the USD/JPY had retraced all of its losses.

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The pair rallied up to as high as ¥102.67 after the release, before falling to as low as 102.34.

EUR/USD 1-minute Chart: February 11, 2014 Intraday

The EUR/USD was generally weaker as the market digested the lack of new stimulus measures outlined. The EUR/USD slipped from near its daily high, falling from as high $1.3678 to as low as 1.3652.

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The pair was only modestly lower, trading at around 1.3658 currently.

Note: Fed Chair Yellen’s testimony will being at 10:00 EST/15:00 GMT. Follow the DailyFX Real Time News feed for up-to-the-minute headlines and analysis.

SSI: Crowds Buying into EUR/USD Weakness

Currently, none of the DailyFX PLUS Trading Signals has an open position in EUR/USD. That makes sense given the mixed signals from the Speculative Sentiment Index (SSI):

The ratio of long to short positions in the EUR/USD stands at -2.55 as only 28% of traders are long. On it's own that's a bullish signal for the pair, since SSI is a contrarian indicator.

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However, it's important to note that long positions are 16.5% higher than yesterday, and short positions are 8.7% lower. That indicates traders are buying into EUR/USD weakness and as a result, the crowd has grown less net-short from yesterday.

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If anything, that's a sign that EUR/USD is more likely to decline further in the short term, but could resume it's uptrend after this short term retracement. Traders with a bullish bias might want to wait for signs of support before going long.

Extreme US Dollar Long Positioning Warns of Further Losses

It's Thursday which means the weekly update of the Speculative Sentiment Index (SSI) was posted today on DailyFX.com

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The strongest bullish signals are for EUR/USD and GBP/USD which means it's no surprise that the SSI-based Momentum2 and Breakout2 strategies are currently giving signals to buy these pairs.

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You can automate both strategies on your FXCM account via the Mirror Trader platform. The same login and password you use on Trading Station will allow you to access Mirror Trader.

Forex Strategy Video: What Would Drive a GBPUSD, GBPJPY Reversal

Hi Jason, do you have any results of these strategies that I can mirror please.

US Dollar May Soon Rally Sharply as Key Indicator Hits Extremes

"Retail forex trading crowds have never been more long the US Dollar versus the British Pound and other currency counterparts. We see material risk of a significant Dollar turnaround."

Weekly Summary of Forex Trader Sentiment and Changes in Positioning

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That was the assessment of quantitative strategist David Rodriguez upon the release of the latest weekly update of our Speculative Sentiment Index (SSI) today on DailyFX.com

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As Rodriguez discusses in the following video, "Dollar reversal risk especially high in the GBP/USD, EUR/USD and USD/CHF".

US Dollar Coiling up for Big Move, but What are the Trades?

The US Dollar continues to coil up for its next move versus the Euro and other counterparts. But how might we trade it? In this video, DailyFX quantitative strategist David Rodriguez highlights the factors he's watching.

Key Points

1. Dollar trades at important resistance as markets remain uncertain
2. Forex cycle studies suggest the middle of the week is critical for the EURUSD
3. US Dollar coiling up for a big move, but we need to see confirmation before trading it

Why Trade AUD/JPY over CAD/JPY, and USD/CHF over EUR/USD?