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USD/JPY Marks First Overbought Signal in 2015; Retail Turns Net-Short

USD/JPY Marks First Overbought Signal in 2015; Retail Turns Net-Short

David Song, Strategist

Talking Points:

- USD/JPY RSI Pushes Into Overbought Territory; Retail Crowd Turns Net-Short.

- EUR/USD Bearish Formation Continues to Take Shape Ahead of G-7 Meeting.

- USDOLLAR Rallies to Fresh Monthly High- Preliminary 1Q GDP Report in Focus.

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USD/JPY

USD/JPY Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • USD/JPY remains at risk for a further advance as the Relative Strength Index (RSI) kicks into overbought territory for first time since late 2014; 123.90 (50% retracement) to 124.14 (2007 high) in focus.
  • May see Japan’s Consumer Price Index (CPI) heighten speculation for a further a further expansion in the Bank of Japan’s (BoJ) asset-purchase program amid expectations for a marked slowdown in price growth.
  • Seeing increased volatility in the DailyFX Speculative Sentiment Index (SSI) going into June, with the retail crowd flipping net-short on USD/JPY earlier this morning, with the ratio currently sitting at -1.00.

EUR/USD

EUR/USD Daily Chart
  • EUR/USD bearish outlook may continue to take shape as it carves top in May; remains at risk for a further decline as it continues to carve a near-term series of lower highs & lows.
  • Will keep a close eye on the Greek situation going into the Group of Seven meeting in Germany as global officials are expected to discuss monetary policy; will the European Central Bank (ECB) come under pressure to scale back its quantitative easing (QE) program?
  • Break/close back below former resistance around 1.0850 (78.6% expansion) to 1.0870 (38.2% retracement) raises the risk of seeing a move towards the April low (1.0519).

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Read More:

Price & Time: Familiar Pattern In USD/JPY

USDCAD Symmetry Backed by FX Sentiment & Volume Analysis

USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

11952.13

11965.99

11880.29

0.58

126.51%

USD/JPY Marks First Overbought Signal in 2015; Retail Turns Net-ShortUSDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Topside targets remain favored for Dow Jones-FXCM U.S. Dollar as it breaks out of the bearish formation carried over from April, but may face a near-term pullback amid the lack of momentum to push back above former support around 11,951 (38.2% expansion) to 11,965 (23.6% retracement).
  • Despite the contraction in U.S. Durable Goods Orders, the pickup in Non-Defense Capital Goods Orders excluding Aircrafts may highlight an improved outlook for the U.S. economy; current market forecasts are for a 0.9% contraction in the 1Q Gross Domestic Product (GDP) report amid an initial forecast for a 0.2% expansion in the growth rate.
  • Will favor the approach to buy-dips in the USDOLLAR, with 11,898 (50% retracement) to 11,901 (78.6% expansion) on the radar.

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USD/JPY Marks First Overbought Signal in 2015; Retail Turns Net-Short

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--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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