Yen Outlook Unclear on Mixed Sentiment
USDJPY – Trading crowds remain aggressively net-long the US Dollar against the Japanese Yen and have been long since the pair traded at 90, giving us consistent signal that the USDJPY could fall to further lows. Yet it serves to warn that recent CFTC Commitment of Traders data showed that Non-commercial futures traders were heavily long the Japanese Yen (short the USDJPY). Very one-sided positioning warns that the USDJPY could bounce on any sudden short covering.
The ratio of long to short positions in the USDJPY stands at 7.69 as nearly 88% of traders are long. Yesterday, the ratio was at 9.90 as 91% of open positions were long. In detail, long positions are 9.5% lower than yesterday and 20.9% stronger since last week. Short positions are 16.5% higher than yesterday and 15.2% weaker since last week. Open interest is 7.1% weaker than yesterday and 17.2% above its monthly average.
The broader trend favors USDJPY losses, but we would warn against getting aggressively short on such one-sided sentiment.
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--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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