US Dollar Forecast to Test Key Support 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. Indeed, crowds continue to add to said long positions, and we have little choice but to take this as a contrarian signal that the USDJPY may hit fresh lows.
How low could we go? We called for a major USDJPY bottom and long-term uptrend in February and continue to believe that the pair is quite unlikely to hit fresh record lows. Yet the US Dollar would need to remain above critical congestion support near ¥78 to keep our longer-term bullish bias intact. Shorter-term support rests at congestion of ¥80, while a hold of nearby resistance of ¥81.80 leaves our downside forecast valid.
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--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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