Japanese Yen Outlook Clouded as USD Surges
Retail forex speculators remain extremely net-long the US Dollar (ticker: USDOLLAR) against the Japanese Yen, underlining the strength of the broader USDJPY downtrend. We would normally take a contrarian bias to retail trading crowds, and that would imply the USDJPY stands to fall further. Yet it is difficult to reconcile a US Dollar-bearish bias in light of significant developments in other USD pairs—particularly as we believe the EURUSD stands to decline further.
Since last week total long interest has fallen 13 percent while shorts are 7 percent higher. When crowds are net-long yet are no longer buying, our SSI data warns of a potential shift in trend or sideways consolidation. Our USDJPY bias is subsequently neutral in light of sentiment shifts.
How do we interpret and trade with the SSI? Watch an FXCM Expo Presentation that explains the SSI.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
To receive the SSI via e-mail and other reports from author David Rodríguez, e-mail subject line “Distribution List” to email@example.com; Contact David via Twitter at http://www.twitter.com/DRodriguezFX