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Japanese Yen Likely to Correct Sharply Higher, but When?

Japanese Yen Likely to Correct Sharply Higher, but When?

Fundamental Forecast for Pound: Neutral

Keeping a close eye on the USDJPY near ¥110

For Real-Time Updates and Potential Trade Setups on the Yen, sign up for DailyFX on Demand

The Japanese Yen fell to fresh post-financial crisis lows versus the surging US Dollar, but a clear slowdown the USDJPY rally warns that it’s near an end. When might we buy?

The difficulty in trading the USDJPY is clear: recent data shows that the trade is extremely crowded, and a sharp correction is possible if not likely. Yet the US Dollar continues to defy our expectations and is plowing higher across the board. We’ll need to wait for signs of concrete turnaround before getting short USDJPY.

An upcoming Bank of Japan Monetary Policy Meeting and Decision dominate event risk for the Japanese Yen in the week ahead, while clear USD outperformance keeps focus on a number of important US data releases. See the full video for our take on what to expect, but in sum: we are likely biding our time and keeping a very close eye on whether the USDJPY breaks above ¥110. - DR

--- Written by David Rodriguez, Quantitative Strategist for David specializes in automated trading strategies. Find out more about our automated sentiment-based strategies on DailyFX PLUS.

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