US Dollar Forecast to Consolidate vs. Yen
USDJPY – Trading crowds remain heavily net-long the US Dollar (ticker: USDOLLAR) against the Japanese Yen as the USDJPY falls noticeably off of significant highs. We would normally take this as contrarian signal that the pair may continue lower, but the crowd has more recently built short positions and closed long positions.
As with other US Dollar pairs, the USDJPY looks as though it may continue to consolidate in the absence of a major breakout or breakdown in the Dow Jones FXCM Dollar Index. We remain modestly bullish USDJPY if the USDOLLAR continues to hold key support at 9900. The extremely yield-sensitive USDJPY may likewise trade off of any significant moves in US Treasury Yields.
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--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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