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USD/JPY Retail FX Longs Narrow Ahead of Bank of Japan (BoJ) Minutes

USD/JPY Retail FX Longs Narrow Ahead of Bank of Japan (BoJ) Minutes

Talking Points:

- USD/JPY Retail FX Longs Narrow Ahead of Bank of Japan (BoJ) Meeting Minutes.

- GBP/USD Holds Weekly Range Ahead of theBank of England’s (BoE) ‘Super Thursday’ Event.

- USDOLLAR Climbs to Fresh Weekly High as ISM Non-Manufacturing Boosts Bets for Strong NFP.

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USD/JPY

USD/JPY Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Will retain a constructive outlook for USD/JPY amid the deviating paths for monetary policy accompanied by the bullish formation in the Relative Strength Index (RSI), but need a break/close above 121.70 (61.8% retracement) to 121.80 (38.2% expansion) to favor a further retracement of the sell-off from August.
  • With the Bank of Japan (BoJ) schedule to release its policy meeting minutes, greater reluctance to further expand the asset-purchase program may heighten the appeal of the Yen and keep the pair capped over the next 24-hours of trade.
  • DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long USD/JPY since June 8, but the ratio continues to come off of recent extremes as it narrows to +1.29, with 56% of traders now long.

GBP/USD

GBP/USD Daily Chart
  • GBP/USD may continue to give back the rebound from the previous month as it appears to have carved a near-term top around the 100-Day SMA (1.5474), while the RSI largely preserves the bearish formation from back in May.
  • May see the sterling face near-term headwind should the Bank of England (BoE) interest rate decision reveal another 8-1 split, but a larger dissent accompanied by a greater concern of overshooting the 2% inflation target may heighten the appeal of the British Pound as the central bank remains on course to normalize monetary policy.
  • Even though GBP/USD holds within the previous day’s range, will keep a close eye on the downside targets, with near-term support coming around 1.5240 (50% retracement) to 1.5250 (100% expansion).

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USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
DJ-FXCM Dollar Index12088.3312092.6212037.830.36109.29%
USDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Dow Jones-FXCM U.S. Dollar extends the advance from earlier this week as ISM Non-Manufacturing unexpectedly advances to 59.1 from 56.9 in September, with the Employment component also showing an uptick during the same period.
  • With the recent data highlighting a healthy reading for job growth, may see market participants boost expectations of seeing a better-than-expected Non-Farm Payrolls (NFP) especially as Fed Chair Janet Yellen remains upbeat on the economy.
  • Will keep a close eye on the monthly opening range, with a break of the October high (12,110) raising the risk for a run at 12,176 (78.6% expansion).

--- Written by David Song, Currency Analyst

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

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