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Japanese Yen, Swiss Franc Analysis: USD/JPY, USD/CHF May Fall as Long Bets Rise

Japanese Yen, Swiss Franc Analysis: USD/JPY, USD/CHF May Fall as Long Bets Rise

Daniel Dubrovsky, Strategist

Japanese Yen, Swiss Franc, USD/JPY, USD/CHF, Technical Analysis, Retail Trader Positioning - Talking Points

  • Retail trader bets hint USD/JPY and USD/CHF may fall in the near-term
  • Technical signals seem bearish, but broader uptrends since January hold
  • Check out my webinar recording on IGCS to learn how to use it in trading

In this week’s webinar on IG Client Sentiment (IGCS), I discussed the outlook for the Japanese Yen and Swiss Franc against the US Dollar. IGCS is typically a contrarian indicator. For detailed analysis, check out the recording of the session above, where I discussed how to use IGCS in a trading strategy as well as covering the fundamental outlook for USD/JPY and USD/CHF.

USD/JPY Sentiment Outlook - Bearish

The IGCS gauge implies that about 48% of retail investors are net long USD/JPY. Upside exposure has decreased by 1.55% while increasing 20.63% over a daily and weekly basis respectively. The fact traders are net short suggests prices may rise. But, recent changes in sentiment warn that USD/JPY could have more room to extend losses.

Japanese Yen, Swiss Franc Analysis: USD/JPY, USD/CHF May Fall as Long Bets Rise

Japanese Yen Technical Analysis

USD/JPY recently pierced through the former 109.38 – 109.85 resistance zone, extending March’s top. The pair took out the 20-day Simple Moving Average (SMA) and is now eyeing the March 23rd low. Beyond that, the 50-day SMA could come into play as a pivotal support point. Bouncing off the latter could open the door for the Japanese Yen to extend losses from the beginning of this year.

USD/JPY Daily Chart

Japanese Yen, Swiss Franc Analysis: USD/JPY, USD/CHF May Fall as Long Bets Rise

Chart Created in Trading View

USD/CHF Sentiment Outlook - Bearish

The IGCS gauge implies that roughly 73% of retail traders are net long USD/CHF. Upside exposure has increased by 2.33% and 32.90% over a daily and weekly basis respectively. The fact that traders are net long suggests prices may fall, and the combination of recent changes in sentiment offers a stronger bearish contrarian trading bias.

Japanese Yen, Swiss Franc Analysis: USD/JPY, USD/CHF May Fall as Long Bets Rise

Swiss Franc Technical Analysis

From a technical standpoint, USD/CHF seems increasingly vulnerable to extending recent losses. The Swiss Franc has taken out the 20-day SMA and has since confirmed a daily close under key support at 0.9214. That has placed the focus on the 50-day SMA where it could come into play as pivotal support. Otherwise, taking it out subsequently exposes the midpoint of the Fibonacci retracement at 0.9115.

USD/CHF Daily Chart

Japanese Yen, Swiss Franc Analysis: USD/JPY, USD/CHF May Fall as Long Bets Rise

Chart Created in Trading View

*IG Client Sentiment Charts and Positioning Data Used from April 13th Report

--- Written by Daniel Dubrovsky, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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

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