Traders are positioning for a more hawkish shift from the U.S. dollar. They’re starting with just a few currencies, the euro, Australian dollar and Japanese yen in particular. The strategy further entails euro short against the dollar, the Australian dollar short against the dollar. Notably, this means taking a long position on the dollar against the yen. These moves come despite growing USD appreciation ahead of a slew of improved USD supportive economic reports and large corporate month-end buying flows.
Traders are preparing to cash in on this anticipated strength. They use much clearer, more defined entry points, stop-loss levels and profit targets on their positions. We’re double-downing on the economic indicators, particularly the basics. That’s why the Consumer Price Index (CPI) is so significant – it has the potential to really shake up market conditions.
Short EUR/USD Strategy
Traders have an entry price for Short EUR/USD at 1.1585, with stop-loss at 1.1711. This strategy would seek to benefit from anticipated euro depreciation against the dollar. The 1.1409 target for this position shows a well thought out risk-reward ratio.
The logic for this decision based on expectations for a stronger USD, fueled by expected strengthening via economic data releases. With month-end approaching, many traders remain on edge. They understand that when market actions ebb and flow, creating instability can result in profits for their positions.
Short AUD/USD Positioning
Other than the euro, traders’ other favorite to short the Australian dollar against the U.S. dollar. For Short AUD/USD, entry price is determined at 0.6486 with stop-loss at 0.6576. The new target profit for this position is 0.6357.
This strategy reflects a deeply rooted bullish sentiment among traders. By adjusting to U.S. economic data releases and moves in markets, they expect to see a fall in the value of the Australian dollar. In the example above, the month-end period is key to the positioning. It can power the movements that create positive conditions for these trades to happen.
Long USD/JPY Outlook
Commercial traders are net long on USD/JPY, going long at an average price of 151.80. Smart Stop loss is at 149.84. Smart TP target 154.84. This kind of positioning is a further sign of deepening confidence in the U.S. dollar’s strength against the Japanese yen.
You can construct a powerful long USD/JPY trade. This strategy aligns well with the broader theme that we expect the USD to strengthen on both fundamental economic reasons as well as month-end trading flows. Traders are positioning for another change in overall market sentiment that may prove strong enough to push prices higher in this pair again.