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USD/JPY Bearish Momentum Signal in Focus; Retail FX Net-Long

USD/JPY Bearish Momentum Signal in Focus; Retail FX Net-Long

David Song, Strategist

Talking Points:

- USD/JPY RSI Falls Back from Overbought; Retail Crowd Remains Net-Long.

- GBP/USD Wedge/Triangle Formation Continues to Take Shape Ahead of BoE Rhetoric.

- USDOLLAR Outlook Hinges on NFP Report- IMF Favors Fed Rate Hike in 2016.

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USD/JPY Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • After coming up against 125.80-90 (61.8% expansion), USD/JPY appears to be facing a growing risk for a near-term pullback as the Relative Strength Index (RSI) falls back from overbought territory; waiting for a close below 123.80-90 (50% expansion) for added conviction.
  • Despite expectations for a further expansion in the Bank of Japan’s (BoJ) easing cycle, seems as though Japanese officials are scaling back the verbal intervention on the local currency as Prime Minister Shinzo Abe favors stable exchange rates.
  • DailyFX Speculative Sentiment Index (SSI) shows retail crowd has flipped net-long USD/JPY on June 8, with the ratio currently sitting at +1.22.


GBP/USD Daily Chart
  • GBP/USD may continue to face range-bound prices in the days ahead as the triangle/wedge formation continues to take shape; remains at risk for a further advance as the RSI fails to retain the bearish momentum from the previous month.
  • Will keep a close eye on U.K. headlines as Bank of England (BoE) Governor Mark Carney and Chancellor of the Exchequer George Osborne are scheduled to speak at the annual Mansion House dinner.
  • With the ongoing series of closes above 1.5180 (23.6% retracement) to 1.5190 (50% retracement), a break/close back above 1.5465 (61.8% retracement) may encourage a larger advance in GBP/USD.

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USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
DJ-FXCM Dollar Index11915.6711945.4211897.30.0266.31%
USDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Dow Jones-FXCM U.S. Dollar may continue to face a narrowing range ahead of the Fed’s June 17 interest rate decision as it struggles to benefit from the positive data prints coming out of the world’s largest economy; will keep a close eye on the monthly opening range.
  • Even though the Federal Open Market Committee (FOMC) keeps June on the table for liftoff, the forward-guidance should continue to play a key role in driving future USDOLLAR volatility as market participants largely look for a rate hike in 2015.
  • Need a break/close above 12,049 (78.6% retracement) to favor a further advance, with near-term support coming in around 11,826 (61.8% expansion) to 11,843 (38.2 retracement) on the radar.

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--- Written by David Song, Currency Analyst

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

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