Japanese Yen Forecast to Rally Further vs US Dollar, British Pound

* Negative ratio indicates net short

 EURUSD – Our forex sentiment indicator shows that traders have sold heavily into recent Euro/US Dollar rallies, but overall market choppiness makes short-term forecasts anything but clear. The ratio of long to short positions in the EURUSD stands at -1.35 as nearly 57% of traders are short. In detail, long positions are 9.3% higher than yesterday and 13.9% stronger since last week. Short positions are 4.0% lower than yesterday and 16.9% stronger since last week. We typically take a contrarian view of forex crowd sentiment, and the net-short EUR/USD SSI Ratio gives contrarian signal to go long the currency pair. Yet we would ideally see more stable sentiment extremes before taking a firm stance on the choppy trading pair.

 GBPUSD –Forex trading sentiment remains effectively neutral the British Pound/US Dollar currency pair, giving little indication on short-term direction. The ratio of long to short positions in the GBPUSD stands at 1.10 as a mere 52% of traders are long. Yesterday, the ratio was at -1.06 as 52% of open positions were short. In detail, long positions are 13.6% higher than yesterday and 5.6% weaker since last week. Short positions are 3.1% lower than yesterday and 25.5% stronger since last week. The overnight build in long positions gives us contrarian signal to go short the currency pair, but we would ideally wait for clear sentiment extremes before making forecasts with conviction.

 USDJPY – Our forex sentiment indicator gives strong signal to go short the US Dollar/Japanese Yen pair, as one-sided trader positioning points to further short-term losses. The ratio of long to short positions in the USDJPY stands at 2.59 as nearly 72% of traders are long. Yesterday, the ratio was at 2.93 as 75% of open positions were long. In detail, long positions are 5.9% lower than yesterday and 39.1% stronger since last week. Short positions are 6.5% higher than yesterday and 0.7% weaker since last week. Our two SSI-based trading strategies remain short the USDJPY, and we expect it to continue lower through near-term trade.

 USDCHF – Our forex sentiment indicator shows that trading crowds remain especially net-long the US Dollar against the Swiss Franc, giving us contrarian signal to go short the currency pair. In fact, the ratio of long to short positions stands at a whopping 3.3 to 1 as nearly 77 percent of traders are long.  Yesterday, the ratio was at 3.63 as 78% of open positions were long. In detail, long positions are 5.9% lower than yesterday and 27.1% stronger since last week. Short positions are 5.7% higher than yesterday and 6.1% weaker since last week. Open interest is 3.4% weaker than yesterday and 15.2% above its monthly average. The SSI is a contrarian indicator and signals further USDCHF losses.

 USDCAD – Our forex sentiment-based trading strategies remain short the US Dollar against the Canadian Dollar, as one-sided crowd sentiment gives us contrarian signal to sell the USDCAD. The ratio of long to short positions in the USDCAD stands at 2.13 as nearly 68% of traders are long. Yesterday, the ratio was at 2.19 as 69% of open positions were long. In detail, long positions are 0.6% lower than yesterday and 3.1% weaker since last week. Short positions are 2.4% higher than yesterday and 13.1% stronger since last week. The SSI is a contrarian indicator and signals more USDCAD losses.

 GBPJPY – Forex sentiment-based British Pound/Japanese Yen forecasts are somewhat unclear, but a recent shift in positioning suggests the pair may yet fall further through upcoming trade. The ratio of long to short positions in the GBPJPY stands at 1.31 as nearly 57% of traders are long. Yesterday, the ratio was at 1.45 as 59% of open positions were long. In detail, long positions are 6.3% lower than yesterday and 27.9% stronger since last week. Short positions are 3.8% higher than yesterday and 9.5% stronger since last week. The continued build in long positions has led one of our sentiment-based trading strategies to go short the GBPJPY, and the SSI suggests that it may see further losses.