Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

Free Trading Guides
Subscribe
Please try again
Select

Live Webinar Events

0

Economic Calendar Events

0

Notify me about

Live Webinar Events
Economic Calendar Events

H

High

M

Medium

L

Low
More View More
Japanese Yen Sentiment Analysis and Outlook: USD/JPY, GBP/JPY, AUD/JPY

Japanese Yen Sentiment Analysis and Outlook: USD/JPY, GBP/JPY, AUD/JPY

Diego Colman, Contributing Strategist

Share:

What's on this page

Most Read: Brent, WTI Reach Yearly High amid Escalations in Russia and Middle East

The fast-paced world of trading often favors following the crowd – jumping on the bandwagon when prices rise and scrambling to sell in a panic. However, experienced and seasoned traders recognize the power of contrarian thinking. Indicators like IG client sentiment provide a glimpse into the market's mindset, highlighting moments when extreme bullishness or bearishness might offer opportunities to take the opposite stance.

Naturally, contrarian indicators shouldn't be treated as foolproof indicators. Their best use lies in supplementing a comprehensive trading approach. Integrating contrarian signals with thorough technical and fundamental analysis helps traders develop a more nuanced perspective on market movements that might be invisible to the majority. Let's delve into this concept by analyzing IG client sentiment and its implications for the Japanese yen.

For an extensive analysis of the yen’s medium-term prospects, which incorporates insights from fundamental and technical viewpoints, download our Q2 trading forecast now!

JPY Forecast
JPY Forecast
Recommended by Diego Colman
Get Your Free JPY Forecast
Get My Guide

USD/JPY FORECAST – MARKET SENTIMENT

IG data reveals an intensely bearish stance towards the USD/JPY among retail traders. Currently, 84.14% hold net-short positions, showcasing a significant 5.31 to 1 short-to-long ratio. This bearish sentiment has intensified further, with net-short positions rising 4.67% since yesterday and 5.30% compared to last week. Conversely, net-long positions have seen moderate growth yesterday (2.39%) but remain below last week's levels.

We often adopt a contrarian view of market sentiment. The overwhelming bearish positioning suggests a potential for continued USD/JPY gains. The recent surge in short positions strengthens this bullish contrarian outlook.

Overall, the combination of heavily bearish sentiment and its recent intensification paints a bullish picture for the USD/JPY from a contrarian perspective. It's worth noting that contrarian signals should always be considered alongside technical and fundamental analysis before making trading decisions.

A graph of a stock market  Description automatically generated

If you're looking for an in-depth analysis of the British pound, our second-quarter outlook is packed with great insights. Get it now!

GBP Forecast
GBP Forecast
Recommended by Diego Colman
Get Your Free GBP Forecast
Get My Guide

GBP/JPY FORECAST – MARKET SENTIMENT

IG client data reveals a wave of pessimism has washed over GBP/JPY traders. Currently, 72.7% hold net-short positions, translating to a notable 2.66 to 1 short-to-long ratio. This bearish stance isn't just strong; it's intensifying, with net-shorts up 4.87% since yesterday and 5.28% since last week. Meanwhile, the already small number of net-long positions decreased slightly yesterday (0.49%) and more significantly from last week's levels (-17.89%).

Taking our usual contrarian stance, this overwhelming bearishness could actually signal an impending GBP/JPY upswing. When a large majority of traders bet on declines, it can often precede a reversal or a corrective bounce. The combination of the entrenched bearish sentiment and its recent surge strengthens this bullish contrarian perspective.

A graph of a stock market  Description automatically generated with medium confidence

Want to learn how retail positioning can offer clues about AUD/JPY’s directional bias? Our sentiment guide contains valuable insights into market psychology as a trend indicator. Download it now!

AUD/JPY Bullish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -42% -5% -19%
Weekly -13% 11% 4%
What does it mean for price action?
Get My Guide

AUD/JPY FORECAST – MARKET SENTIMENT

Recent statistics from IG's retail trader data indicate that 65.19% of clients are currently positioned net-short on AUD/JPY, with the ratio of bearish to bullish positions standing at 1.87 to 1. This bearish sentiment is not only prevalent but also on the rise, with net-short positions increasing 5.76% since yesterday and a notable 12.21% compared to last week. Meanwhile, net-long positions have edged slightly higher since yesterday (0.64%) but remain significantly down (-14.21%) from last week's readings.

We often look to contrarian signals within market sentiment. The predominantly bearish positioning suggests there may be room for further AUD/JPY gains. The recent intensification of this bearishness among traders reinforces a potential bullish outlook from a contrarian perspective. As always, it's vital to integrate these signals with thorough technical and fundamental analysis for a comprehensive trading strategy.

A graph of a chart  Description automatically generated with medium confidence

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES