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
Mixed
Oil - US Crude
Bearish
Wall Street
Bearish
Gold
Mixed
GBP/USD
Bullish
USD/JPY
Mixed
More View more
Real Time News
  • OPEC reportedly moves up oil production meeting to June 4 #OOTT
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.69%, while traders in US 500 are at opposite extremes with 75.44%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/uuUtwe3YrJ
  • Technical Trade Levels: #Dollar, $EURUSD, $USDCAD, $AUDUSD, #Gold, #SPX and more! (Webinar Archive) - https://t.co/3UevjO8Lil
  • Commodities Update: As of 16:00, these are your best and worst performers based on the London trading schedule: Silver: 2.04% Gold: 0.55% Oil - US Crude: -1.48% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/5jVWooiTee
  • GBP/USD IG Client Sentiment: Our data shows traders are now net-short GBP/USD for the first time since May 06, 2020 when GBP/USD traded near 1.23. A contrarian view of crowd sentiment points to GBP/USD strength. https://www.dailyfx.com/sentiment https://t.co/wyWpKN83H2
  • Forex Update: As of 16:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 1.79% 🇨🇦CAD: 1.33% 🇳🇿NZD: 1.31% 🇪🇺EUR: 0.20% 🇯🇵JPY: 0.19% 🇨🇭CHF: 0.03% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/q2qAPkPXZi
  • Indices Update: As of 16:00, these are your best and worst performers based on the London trading schedule: US 500: 0.29% Wall Street: 0.27% Germany 30: 0.08% FTSE 100: -0.00% France 40: -0.01% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/vHF9F2qb4Z
  • Happy Monday traders! What does the new month bring? Are we looking at positive sentiment but not much momentum❔ What are the market highlights heading into New York open? Find out from @DailyFX Chief Strategist, @JohnKicklighter 👇 https://t.co/xaHZXjZdZr
  • US Treasury Secretary Steven Mnuchin to hold call with G-7 finance ministers on Wednesday per his public schedule $DXY
  • Overlay that with google search terms for “protest” and “riots” and you see a similar uptick. Last time we saw a surge in these search terms was back in August 2019 and we saw a lot of volatility ensue shortly after. https://t.co/ZXAkgRWfAB
Here are the Reasons why the Japanese Yen Could Bounce Sharply

Here are the Reasons why the Japanese Yen Could Bounce Sharply

2013-12-04 17:25:00
David Rodriguez, Head of Product
Share:

1. The Dollar has broken substantial resistance versus the Yen, but early sign of USDJPY turn is clear warning

2. Strong link to the Japanese Nikkei 225 leaves the domestic currency at risk into year-end

3. Our retail forex sentiment-based Momentum2 system strategy has now sold USDJPY and GBPJPY

US Dollar/Japanese Yen at Longest Consecutive Streak of Gains since January

forex_japanese_yen_forecast_with_three_factors_to_watch_body_Picture_5.png, Here are the Reasons why the Japanese Yen Could Bounce Sharply

Source: FXCM Trading Station Desktop, Prepared by David Rodriguez

1. The USDJPY is at its longest win streak since January. Such a level has coincided with important turns in the past 7 years. Our Senior Technical Strategist further points out key risks of an outside-day reversal in the USDJPY.

Strong Correlation between Japanese Yen and the Japanese Nikkei 225 leaves USDJPY at Risk

forex_japanese_yen_forecast_with_three_factors_to_watch_body_Picture_6.png, Here are the Reasons why the Japanese Yen Could Bounce Sharply

2. The strong link between the Japanese Yen and the Nikkei 225 suggests that the next major JPY move will happen on similar price action out of Japanese stocks. The Nikkei has surged towards year-to-date peaks, but it’s important to note that the index is coming up on major long-term trendline resistance.

It’s likewise worth noting that Japanese investors could sell holdings ahead of January as the domestic capital gains tax rate is set to double in 2014. The timing of any selling—if it does occur—is not obvious.

Yet it’s difficult to ignore the risk of a pullback given that the Nikkei 225 is up nearly 50 percent on a year-to-date basis.

Japanese Nikkei 225 Index is Testing Resistance Dating back to 1991

forex_japanese_yen_forecast_with_three_factors_to_watch_body_Picture_7.png, Here are the Reasons why the Japanese Yen Could Bounce Sharply

Source: FXCM Trading Station Desktop, Prepared by David Rodriguez

3. A noteworthy shift in retail forex positioning has led our Momentum2 trading strategy to sell the USDJPY and GBPJPY for the first time in a month. And though there’s obvious risk that this is a minor correction within a much larger uptrend, the early turn in retail trader sentiment adds weight to calls for a potential JPY reversal.

Retail forex trading crowds are now their least short the GBPJPY since the start of November

forex_japanese_yen_forecast_with_three_factors_to_watch_body_Picture_8.png, Here are the Reasons why the Japanese Yen Could Bounce Sharply

Source: FXCM Execution Desk Data

It will be important to watch the next moves in crowd sentiment. Traders remain heavily net-short the GBPJPY and similarly short USDJPY and EURJPY. We typically use our proprietary Speculative Sentiment Index data as a contrarian indicator to price action: if everyone’s short we prefer being long and vice versa.

Yet early signs of a shift alongside key technical and fundamental risks underline the potential for a Japanese Yen bounce (USDJPY pullback).

Follow any updates on the Japanese Yen via this author’s e-mail distribution list.

Forex Correlations SummaryView forex correlations to the S&P 500, S&P Volatility Index (VIX), Crude Oil Futures prices, US 2-Year Treasury Yields, and Spot Gold prices.

forex_japanese_yen_forecast_with_three_factors_to_watch_body_Correlations.png, Here are the Reasons why the Japanese Yen Could Bounce Sharply

Data source: Bloomberg. Chart source: R SEE GUIDE ON READING THE ABOVE CHART

--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com David specializes in automated trading strategies. Find out more about our automated sentiment-based strategies on DailyFX PLUS.

Contact and follow David via Twitter: https://twitter.com/DRodriguezFX

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

DISCLOSURES

News & Analysis at your fingertips.