Yen may have Topped (USDJPY Bottomed)
USDJPY – Forex trading crowds are their least net-long the US Dollar against the Japanese Yen since the pair last traded to ¥78, and the tide has clearly turned in favor of further USDJPY strength. The all-important question is obvious: is this a lasting turn or another opportunity for long-term Japanese Yen bulls (USDJPY bears) to re-initiate long positions (USDJPY short positions)?
The ratio of long to short positions in the USDJPY stands at 2.52 as nearly 72% of traders are long. This is a significant shift from last week as short positions have more than doubled at +123.6% while long positions are down 23.0%.
Again, the critical question is whether this is a lasting shift and not just another ‘fake-out’ to the topside. Implied volatility expectations on USDJPY options show that few predict major exchange rate swings. It seems like we’ll find out soon enough whether the USDJPY has the momentum to take out further highs. ¥80 seems like the next line in the sand.
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--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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