We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bullish
Gold
Bullish
GBP/USD
Bullish
USD/JPY
Bearish
More View more
Real Time News
  • 🇦🇺 AUD Trade Balance (FEB), Actual: 4.36B Expected: A$3750m Previous: A$5210m https://www.dailyfx.com/economic-calendar#2020-04-07
  • The Federal Reserve has made a powerful statement about its commitment to shoring up offshore $USD funding markets through the #coronavirus spread. Get your market update from @DavidCottleFX here:https://t.co/fLZjxjr4L9 https://t.co/bqKPilAihX
  • Japan Chief Cabinet Secretary: - The economy is facing its biggest crisis in recent years (BBG)
  • Heads Up:🇦🇺 AUD Trade Balance (FEB) due at 01:30 GMT (15min), Actual: N/A Expected: A$3750m Previous: A$5210m https://www.dailyfx.com/economic-calendar#2020-04-07
  • Join @IlyaSpivak 's #webinar at 10:00 PM ET /2:00 AM GMT to prepare for the week ahead in trading $AUDUSD Register here: https://t.co/sZNWPVRHA0 https://t.co/fP9OUELm3l
  • Wall Street Futures Update [delayed]: S&P 500 (+0.36%) Dow Jones (+0.39%) Nasdaq (+0.18%) -BBG
  • RT @IGSquawk: The RBA will announce its decision on the Official Cash Rate at 14:30 AEST. Markets currently pricing in a 53.5% chance of a…
  • The #Euro has dropped through support guiding it higher from late-March lows, suggesting that the end of a corrective rebound has given way to downtrend resumption. Get your $EURUSD market update from @IlyaSpivak here: https://t.co/gpKowYNmGi https://t.co/WtFZCdOqIn
  • Gold Prices May Fall on FOMC Minutes, Recession & Credit Risks - https://www.dailyfx.com/forex/fundamental/forecast/weekly/chf/2020/04/04/Gold-Prices-May-Fall-on-FOMC-Minutes-Recession-Credit-Risks.html
  • (Asia AM) The US #Dollar and Japanese #Yen fell as #coronavirus cases seemed to stabilize in the US and Europe. The #DowJones and #SP500 soared. Local policymakers also hinted at more stimulus $USDJPY - https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/asia_am_briefing/2020/04/06/US-Dollar-Japanese-Yen-Sink-as-Dow-Jones-Soars-on-Virus-Easing-Bets.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/sGqWNz7v7M
USD/JPY Retail Sentiment Shifts, RSI Snaps Bullish Trend Ahead of FOMC

USD/JPY Retail Sentiment Shifts, RSI Snaps Bullish Trend Ahead of FOMC

2018-12-18 16:30:00
David Song, Strategist
Share:

Japanese Yen Talking Points

The recent decline in USD/JPY appears to have stalled ahead of the monthly-low (112.23) as attention turns to the Federal Reserve interest rate decision, but fresh developments in the Relative Strength Index (RSI) casts a bearish outlook for the exchange rate as the oscillator extends the bearish formation from October.

Image of daily change for major currencies

USD/JPY Retail Sentiment Shifts, RSI Snaps Bullish Trend Ahead of FOMC

Image of daily change for usdjpy rate

USD/JPY appears to be holding the monthly opening-range as the Federal Open Market Committee (FOMC) is widely expected to deliver at 25bp rate-hike, and a hawkish forward-guidance for monetary policy may keep the dollar-yen exchange rate afloat as the central bank appears to be on track to carry the hiking-cycle into 2019.

Image of fed interest rate forecast

Ongoing projections for a longer-run interest rate of 2.75% of 3.00% would imply that the FOMC remains committed in normalizing monetary policy despite the recent remarks from the Trump Administration, but a downward revision in the dot-plot would suggest the central bank is quickly approaching the end of its hiking-cycle as Fed officials show a greater willingness to tolerate above-target inflation over the policy horizon.

With that said, the fresh updates from Chairman Jerome Powell & Co. are likely to impact the near-term outlook for USD/JPY, but there appears to be a shift in retail sentiment as traders fade the recent weakness in the exchange rate.

Please add a description for the image.

The IG Client Sentiment Report shows 55.9% of traders are now net-long USD/JPY compared to 44.1% in late-November, with the ratio of traders long to short at 1.27 to 1. In fact, the percentage of traders net-long is now its highest since October 16 when USD/JPY traded near 112.30. The number of traders net-long is 46.2% higher than yesterday and 34.7% higher from last week, while the number of traders net-short is 31.4% lower than yesterday and 23.0% lower from last week.

The drop in net-short position points to profit-taking behavior ahead of the Fed rate decision, but the sharp rise in net-long interest suggests retail traders are betting on the November range to hold over the days ahead, with the shift in the IG sentiment index offering a contrarian view to crowd sentiment especially as USD/JPY snaps the upward trend from earlier this year.

Moreover, the series of failed attempt totest the 2018-high (114.55) warns of a larger pullback, with the Relative Strength Index (RSI) starting to flash a bearish signal as it threatens trendline support. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

USD/JPY Daily Chart

Image of usdjpy daily chart
  • Keep in mind, the near-term outlook for USD/JPY remains capped by the 113.80 (23.6% expansion) to 114.30 (23.6% retracement) region, with the lack of momentum to test the 2018-high (114.55) raising the risk for a further decline in the exchange rate as it carves a series of lower highs & lows.
  • In turn, the 112.40 (61.8% retracement) to 113.00 (38.2% expansion) region sits on the radar, with a close below the stated region raising the risk for a move towards 111.10 (61.8% expansion) to 111.80 (23.6% expansion), which lines up with the October-low (111.38).

For more in-depth analysis, check out the Q4 Forecast for the Japanese Yen

Image of DailyFX economic calendar

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2018.

--- Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.

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

DISCLOSURES

News & Analysis at your fingertips.