US Dollar Remains in Focus as Contest Trading Concludes
The month of May is quickly closing, which means we are wrapping up another $10,000 trading challenge. Our top five competitors this month have had phenomenal success so far, with V.S. from Glendale, California leading the field with an 810% gain! Remember though this month’s challenge hasn’t concluded yet—over a week of trading still remains. To get a better idea of what is going on in the market, and get an idea of what our competitors might be trading, let’s review some of the major market themes occurring during the month of May.
Past performance is not necessarily indicative of future results. The leaderboard shows the top 10 contestants out of thousands and does not represent a typical contestant’s return. Positive returns are not guaranteed. All contestants have the potential to experience losses in excess of deposited funds.
As with last month, the US Dollar has again been in focus for the month of May. While April’s trading centered on a major sell off for the US Dollar, traders are now focusing on its recent appreciation relative to major pairs. The EUR/USD for instance has declined as much as 437 pips on the month. Also, with many contest participants tracking commodity currencies, it should be noted that the USD/CAD has risen 713 pips from the May low at 1.2460. Most of the movement on the US Dollar has been based on the presumption of future rate hikes from the Fed. This is with good reason, as John Williams from the San Francisco Fed recently stated in an interview that “In my view it will be appropriate to start raising rates again later this year.”
SSI is another way to monitor how traders are positioning themselves going into this month’s close. Here, the Aussie Dollar takes focus as both the EUR/AUD and AUD/USD remain at extremes. Currently sentiment for the EUR/AUD sits at an extreme reading of -3.5. This SSI reading means that nearly 72% of all positions are short for the pair. Typically, when positioning is heavily net short, this signals a currency pair may potentially be trending higher. With the EUR/AUD trading just off of its highs, the pair has advanced as much as 687 pips for the month of May!
With all of the exciting action this month, it’s now time to prepare for next month’s $10,000 trading challenge. New traders that are looking to get involved in the market for next months challenge should remember that DailyFX offers a variety of resources to help them get started with their trading.
Traders focusing on market fundamentals can begin their research by reading the latest information on the Euro and US Dollar from our 2016 Analyst forecasts. Traders looking to revamp their risk management skills may also want to review our Traits of Successful Traders e-Guide. This is a great read to help traders get up to speed on the number one mistake traders make, as well as review the effects of trading with leverage.
If you are unfamiliar with the contest, the $10,000 Monthly Challenge is a currency trading contest hosted by FXCM, which gives away $10,000 in total cash prizes every month: $5,000 for the trader with the highest trading return, $2,500 to second place, $1,500 goes to third place, $750 for fourth, and finally a $250 prize for fifth place. For more information on the $10,000 Monthly Challenge and to read the rules for entry and how to win, visit the FXCM UK website.
