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Japanese Yen Sentiment Warns of Potential Reversal

David Rodriguez
ssi_usd-jpy_body_Picture_18.png, Japanese Yen Sentiment Warns of Potential Reversal

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USDJPYRetail forex traders have sold aggressively into US Dollar gains versus the Japanese Yen, but early signs of a turn in sentiment underline risks of a larger USDJPY correction.

Trade Implications – JPY Pairs: Our retail sentiment-based Momentum2strategy has done well buying into Japanese Yen declines (USDJPY, EURJPY, GBPJPY gains), but the same strategy has most recently bought the JPY on early signs of a potential bounce. Indeed, we highlight three key factors that may favor a USDJPY pullback through near-term trading.

Major tops and bottoms are only clear in hindsight, and it is especially difficult to call reversals on such one-sided currency trends. Yet we can’t ignore these signs of a potentially significant shift in JPY exchange rates.

Written by David Rodriguez, Quantitative Strategist for DailyFX.com

ssi_usd-jpy_body_Picture_8.png, Japanese Yen Sentiment Warns of Potential Reversal

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