The ratio of long to short positions in the EURUSD stands at -2.51 as nearly 72% of traders are short. Yesterday, the ratio was at -2.61 as 72% of open positions were short. In detail, long positions are 4.6% higher than yesterday and 7.6% weaker since last week. Short positions are 0.9% higher than yesterday and 20.6% stronger since last week. Open interest is 1.9% stronger than yesterday and 10.0% above its monthly average. The SSI is a contrarian indicator and signals more EURUSD gains.

Source: FXCM Dealing Desk

For historical data and the latest charts based on the SSI please visit http://www.dailyfx.com/story/special...715337428.html

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

I can't be sure, but I'm fairly confident that Antonio paid you to say that. ;-)

On on a more serious note, I definitely agree with Antonio's assessment. The 2-year swap rate differential has definitely shown a correlation with the direction of the EURUSD--especially since 2005.

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What is the general strategy with most here, are you guys going to take positions before the fed cut announcement or in the first few seconds as the announcement is being made?

You should wait for a few hours after the annoucement and see if a trending move starts, then ride along. Entering seconds after the annoucement leaves you subject to whipsaw with its accompaning losses.

I like to trade really big surprises in news events. True, the risk of whipsaws is very high, but it's proven fairly profitable for me through the times I've done it. You need nerves of steel and a pretty good appreciation for how prices tend to move following these big surprises. Namely: very unpredictably.

I agree about the whipsaw but i have to say that a lot of pop takes places in the ensuing seconds and minutes after the announcement, i'm pretty aggressive so i like to be in the mix. Generally even with a correction, the trend will continue. In the case of a .25bp cut, the dollar can pull back for a while but its still going lower, and with a .50bp cut, the dollar will be on suicide watch for a while to come.

I agree. Big event risk like this is a rare oppurtunity for considerable moves in price, so setting up trades before hand can be very lucrative.

That being said, whether or not you take enter a position or orders beforehand really depends on your trading style. If you are a long-term trader looking for hundreds of pips or just taking a long-term view on the dollar, then waiting for the initial move to pass is probably wise. If you just stand aside for the first five to fifteen minutes following the release, you can absorb how it speaks for the currency and take your position. That being said, if I were already in a long position with considerable profit and a target like 1.50, I wouldn't take get out before the report just to get back in afterwards at a worst price. Of course you could take a hit, but drawdowns are inevitable in that kind of time frame. At most I would reduce the size of the trade or shore up stops to protect profit.

Alternatively, from a pure event risk stand point, you can set out orders before the Fed decision looking to catch a wave of momentum after a break (this is what I am considered doing). I'll just look across the majors and yen crosses and look for the pairs with the greatest technical build up. You can have a pair for an upside and downside surprise scenario with corresponding technical levels and set entry orders a considerable distance above or below to give you some time to cancel the order if the report is a dud. Of course, you run the risk of big whipsaws, but given that the decision and statement is released at the same time and everyone is already knows how they will react to different scenarios, I don't think we we will see too much chop before momentum takes over.

How are you going to play this AtlantaFX?

That's good advice - if the news is really market worthy it will have an effect for at least then next 24 hours.

From Thompson - interesting blurb, if not somewhat outdated (no idea why they republished it unless they thought it was still relevant).

Boom, GDP knocked out of the park. Gotta love those strong exports

I think going long EUR, GBP and CHF against $ is the way to go with any kind of a cut. With a no cut, I would sell NZD or AUD against the yen.
What do you think?

Well, I'm tempted to play on technical levels and join in the momentum of some of the outperformers in the event of a surprise (EURUSD, USDCAD); but I think it is more prudent to buy the least overbought anti-dollar and sell the most oversold. For a long, I think NZDUSD still has good upside potential before pushing to new highs (so my reasoning goes it has an unfettered 300 points to rise before traders become leery again and start to really have to fight for the upside). On the shortside, I think USDCAD, EURUSD, GBPUSD are the pairs to watch. However, IMHO, the Canadian dollar is the most overbought considering its position on inflation, economy size and dependence on one or two economic components.

Now, to fit those considerations into a real trading plan!

shorted euppy 166.57, looking for a retest of 165.85 initially.
if euro drops below 4370, might hold it...........
entries waiting for euro at 1.4453 , 72 and 93 to short........ no stops as of now.

looking for 4283 touc down and posisbly lower...

i think 25 bp cut is already priced in......... 50 would be trouble for me, but risk to reward is awesome on shorts..............

Good Luck ALL................

__________________
Patience is virtue. The sooner we learn this all, sooner we can start walking to the bank. Good Luck to all of us—
The trick is to wait the price meet ur limits, instead of one jumping in.. however scalps is a totally different scenario and is not everyone's cup of tea
Disclaimer: I'm not at all suggesting trades when by either posting the graphs, or my entries. You can view it, but in the end you have to use your own logic and approach, as there is no certainty about this uncertain market...

I personally will play a "wait and see" approach on a single 25bp cut. It will be really important to watch the subsequent statement to gauge whether or not the Fed leans towards more rate cuts or neutrality. If the Fed shows willingness to continue cutting and explicitly states that risks to growth outweigh those to inflation, I think short USD against the basket you mention is a pretty good call.

In the case of no cut; definitely. Long the JPY against the high-yielders could definitely pan out nicely.

The initial reaction to a 50bp cut would be clearly dollar negative. Whats not as clear to me is the immediate reaction to a 25bp cut while everyone has a chance to digest the statement. I can see the dollar pulling back for a while and then continuing its dive lower.
From a currency trading stand point, i would much prefer a 50bp cut.