USDJPY – Retail traders have bought aggressively into US Dollar (ticker: USDOLLAR) weakness against the Japanese Yen, and our retail-based Speculative Sentiment Index data shows there are currently over 12 traders long USDJPY for every one that is short.
We recently wrote that the USD likely set a significant bottom versus the JPY, but the pair broke below our price floor at ¥78 and it’s difficult to advocate getting long USDJPY amidst such clear downward momentum.
The USDJPY will almost certainly see substantial volatility on a critical US Federal Open Market Committee interest rate announcement due this afternoon. We will likely update our forecasts for the pair on any surprises, but in the meantime we can’t advocate joining the crowd in getting long at these price levels.
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--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.