Before we look at how much traders hate the Euro and love the US Dollar, let’s check in with what I said previously about the greenback. Back in December I wrote of the sudden shift in dollar sentiment and how it made me cautious for any further advances in what was possibly, real strength in the dollar.
As you can see from the chart, the US Dollar index reversed and headed down on the exact date that I wrote the above comment (December 22nd 2009). It fell from a high of 78.45 to a low of 76.60 - not a bad prognostication if I do say so myself:
I’m not really surprised to see this as the Euro is getting hammered over the abysmal finances in the PIIGs (Portugal, Italy, Ireland, Greece and Spain). But I don’t see an edge from using the CoT data as an indicator. For example, in October 2008 when the net speculative long position in the US dollar was similarly high the US Dollar index was reaching an important top. Finally, the Daily Sentiment Index for the US dollar is now at 90% - just a data point to tuck under your hat.
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