USDJPY – Retail forex traders have sold aggressively into US Dollar strength against the Japanese Yen, and the sharp reversal in positioning have led our sentiment-based strategies to buy USDJPY strength.
Trade Implications – USDJPY: Last week we wrote that our Breakout-based and trend-following strategies sold the USDJPY, EURJPY, GBPJPY, and AUDJPY. Yet a noteworthy reversal in price action and sentiment has forced those systems to go long the Yen crosses (short the JPY itself). Previously we had warned of a potential sentiment extreme forcing a larger USDJPY sell-off. Yet that reversal has arguably proven short-lived, and markets seem all too willing to send the JPY lower (USDJPY higher).
Written by David Rodriguez, Quantitative Strategist for DailyFX.com
To receive the Speculative Sentiment Index and other reports from this author via e-mail, sign up for his distribution list via this link.
New to FX markets? Learn more in our video trading guide.
Contact David via
Twitter at http://www.twitter.com/DRodriguezFX
Facebook at http://www.Facebook.com/DRodriguezFX