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EURUSD - Euro Outlook Mixed Against US Dollar
USDJPY - Japanese Yen Forecast to Rally Further Versus US Dollar
GBPUSD - Forex Systems Buy British Pound Aggressively on Sentiment
USDCHF - Swiss Franc Forecast to Gain Against US Dollar
USDCAD - Canadian Dollar Forecast to Appreciate Against US Dollar

While the SSI is available once a week on DailyFX.com, you can receive SSI readings twice a day in DailyFX Plus Forex Intraday Trading Signals

The SSI sought a EURUSD rally since 1.26 and was signaling a reversal around 1.60. Find our more in the DailyFX Forex Forum

Historical Charts of Speculative Forex Trading Positioning

EURUSD - Our forex trading signals remain sold the Euro against the US Dollar, as shifts in forex sentiment signaled that further EUR/USD losses are likely. Yet increasingly indecisive forex traders have limited the conviction of our sentiment-based Euro forecasts—especially as the pair seems relegated to a progressively narrower trading range. The ratio of long to short positions in the EURUSD stands at 1.13 as nearly 53% of traders are long. Yesterday, the ratio was at 1.10 as 52% of open positions were long. In detail, long positions are 2.4% higher than yesterday and 9.2% weaker since last week. Short positions are 0.1% lower than yesterday and 19.8% stronger since last week. Open interest is 1.2% stronger than yesterday and 9.3% above its monthly average. The SSI is a contrarian indicator and signals more EURUSD losses.

USDJPY - Our contrarian forex trading strategies remain short the US Dollar against the Japanese Yen, as forex sentiment highlights risks of further USD/JPY weakness. The ratio of long to short positions in the USDJPY stands at 1.24 as nearly 55% of traders are long. Yesterday, the ratio was at 1.00 as 50% of open positions were long. In detail, long positions are 27.6% higher than yesterday and 49.2% stronger since last week. Short positions are 3.3% higher than yesterday and 6.1% stronger since last week. Open interest is 15.5% stronger than yesterday and 26.2% above its monthly average. The SSI is a contrarian indicator and signals more USDJPY losses. Such analysis lines up nicely with Forex Futures data, which shows that the USD/JPY may decline through the medium term.

GBPUSD -Our forex trading strategies recently bought aggressively into GBP/USD rallies, as a contrarian view of sentiment signaled that further advances were likely. The ratio of long to short positions in the GBPUSD stands at -1.32 as nearly 57% of traders are short. Yesterday, the ratio was at -1.02 as 50% of open positions were short. In detail, long positions are 0.7% higher than yesterday and 19.1% weaker since last week. Short positions are a sizeable 31.0% higher than yesterday and 57.5% stronger since last week. Open interest is 16.0% stronger than yesterday and 52.7% above its monthly average. The SSI is a contrarian indicator and signals more GBPUSD gains.

USDCHF -The ratio of long to short positions in the USDCHF stands at 1.34 as nearly 57% of traders are long. Yesterday, the ratio was at -1.13 as 53% of open positions were short. In detail, long positions are 38.8% higher than yesterday and 50.6% stronger since last week. Short positions are 8.6% lower than yesterday and 7.8% stronger since last week. Open interest is 13.6% stronger than yesterday and 1.2% below its monthly average. The SSI is a contrarian indicator and signals more USDCHF losses.

USDCAD - Our forex trading signals remain aggressively short the US Dollar against the Canadian dollar, as a surge in forex crowd buying gave clear contrarian signal to sell. The ratio of long to short positions in the USDCAD stands at 2.05 as nearly 67% of traders are long. Yesterday, the ratio was at 2.23 as 69% of open positions were long. In detail, long positions are unchanged from yesterday and 19.9% stronger since last week. Short positions are 8.7% higher than yesterday and 16.3% stronger since last week. Open interest is 2.7% stronger than yesterday and 30.7% above its monthly average. The SSI is a contrarian indicator and signals more USDCAD losses.

How do we interpret the SSI? The FXCM SSI is based on proprietary customer flow information and is designed to recognize price trend breaks and reversals in the four most popularly traded currency pairs. The absolute number of the ratio itself represents the amount by which longs exceed shorts or vice versa. For example if the EURUSD ratio is 2.55, long customer orders exceed short orders by a ratio of 2.55 to 1. Conceptually similar to contrarian analyses using the CFTC IMM open position data or COT Report, the SSI provides an alternative approach that is both more timely and accurate in forecasting currency price movement. The SSI is a contrarian indicator that tells you how the market is weighted and where the trend may head. More long positions don't necessary suggest more confidence in the direction of the current trend. In general, when traders start having adverse movements against their position, many tend to increase the size of their position with the purpose to average down their entry price in one last attempt to recover from previous losses. However, the higher the number of short orders in a bull market the more dangerous is to take additional shorts because many of those traders who just entered the markets are also leaving their protective stop losses just above the current price action.

Have any further questions about the SSI and forex positioning data? Ask the author David Rodríguez on our forex forum.

We love getting feedback on our reports. Tell us how we're doing: E-mail the author of this report at drodriguez@dailyfx.com.

For information on an FXCM Managed Account that takes advantage of the SSI, please review our Sentiment Program at: http://www.fxcmmanagedaccounts.com/ or call +1 646-432-2968.