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Forex Analysis:Sticking Mostly to Sidelines, long USDJPY

Forex Analysis:Sticking Mostly to Sidelines, long USDJPY

David Rodriguez, Head of Product

A surge in crowd US Dollar (ticker: USDOLLAR) buying leaves my short-term bearish forecast intact, and as a result I'm mostly to the sidelines.

Yesterday I wrote about my bearish forecasts for the USD and JPY based on exceedingly low FX market volatility. My forex strategy outlook report made the case for selling into USD weakness, and that's further confirmed by aggressive crowd buying as seen through today's speculative sentiment index report.

Yet I'm likewise not enthusiastic about getting short the USD as positioning is often at its most extreme at the top/bottom of the market. Instead I'll stick to my more medium-term USDJPY-bullish bias and watch for opportunities to trade any subsequent USD reversals.

As I wrote last week, I remain in a small USDJPY long position and would add at the 81.60 mark. Given that it's a longer-term position max risk will be below the 79 mark.

I'll keep my thoughts posted via the forex real time news feed.

--- Written by David Rodriguez, Quantitative Strategist for To receive the Speculative Sentiment Index and other reports from this author via e-mail, sign up to David’s e-mail distribution list via this link.

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