Market Sentiment Positive, Strong USD Dominating Trading

Market sentiment analysis:

  • Trader confidence is currently high as the global economy recovers from the slump caused by the coronavirus pandemic.
  • This session the markets are pausing for breath but US Treasury yields will likely continue to rise in future, boosting the US Dollar, and that USD strength is dominating market trading.

Traders confident of global recovery

Traders are optimistic that the global economy is recovering, partly thanks to the efforts of central banks and governments to keep monetary policy easy and ensure that fiscal policy is loose too. That is boosting US Treasury yields on fears that a swift recovery could lift inflation and that, in turn, is helping to strengthen the US Dollar.

This USD strength will likely continue once the current pause for breath is over. Other trends that will likely persist are the move into value stocks that were hit hard by the pandemic from tech company stocks, rising oil prices, a higher bitcoin price and weaker gold prices.

US Dollar Basket, One-Hour Timeframe (February 25 – March 9, 2021)

Chart by IG (You can click on it for a larger image)

of clients are net long.

of clients are net short.

Change in Longs Shorts OI
Daily 2% 0% 1%
Weekly 6% -4% 1%

In this webinar, I looked at the trends in the major currency, commodity and stock markets, at the forward-looking data on the economic calendar this week, at the IG Client Sentiment page on the DailyFX website, and at the IG Client Sentiment reports that accompany it.

You can also read more here about sentiment analysis in forex trading

Building Confidence in Trading

Building Confidence in Trading

Recommended by Martin Essex, MSTA

Building Confidence in Trading

— Written by Martin Essex, Analyst and Editor

Feel free to contact me on Twitter @MartinSEssex

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