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USD/JPY Price Eyes Multi-Month Low, Bearish Client Sentiment Grows

USD/JPY Price Eyes Multi-Month Low, Bearish Client Sentiment Grows

Nick Cawley, Senior Strategist


What's on this page

USD/JPY Price, News and Analysis:

  • A slight pick-up in the US dollar has not registered in USD/JPY.
  • IG retail sentiment data highlights a bearish outlook.

The latest monetary policy decisions from the Bank of Japan (BoJ) and the Federal Reserve (Fed) has done little to stem losses in USD/JPY with the pair printing four bearish candles in a row this week and losing around 150 pips in the process. The Fed left all policy measures unchanged and suggested that they would keep interest rates low through 2023, and let inflation overshoot 2%, while the BoJ also left monetary policy untouched but said that the economy had started to pick-up although conditions remained severe due to the COVID-19 pandemic. The US dollar picked up a small bid, on a less-dovish than perceived Fed, but this did not read across into USD/JPY which continued to weaken.

DailyFX Economic Data and Events Calendar

The daily chart shows the current weakness in USD/JPY with the pair comprehensively breaking below the 20- and 5-day moving averages at the start of the week. Despite being in oversold territory, the daily candles formed this week all display lower highs and lower lows and the pair now trades back below 105.00 for the first time in six weeks. The medium-term series of lower highs, starting in late February, also remain intact. Horizontal support off the July 31 low at 104.19 may stem the recent fall in the short-term, but it is likely to struggle to control the sell-off further out.

USD/JPY Daily Price Chart (December 2019 – September 17, 2020)

Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 15% 6% 8%
Weekly -13% 1% -3%
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IG Retail trader data 67.64% of traders are net-long with the ratio of traders long to short at 2.09 to 1. The number of traders net-long is 15.43% higher than yesterday and 57.47% higher from last week, while the number of traders net-short is 11.58% lower than yesterday and 21.60% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/JPY prices may continue to fall.Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger USD/JPY-bearish contrarian trading bias.

What is your view on USD/JPY – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.

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