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Japanese Yen Offers Attractive Range Trading

Japanese Yen Offers Attractive Range Trading

David Rodriguez, Head of Product
ssi_usd-jpy_body_Picture_7.png, Japanese Yen Offers Attractive Range Trading

USDJPY – Retail traders have bought aggressively into US Dollar (ticker: USDOLLAR) weakness against the Japanese Yen, and we see little choice but call for further USDJPY weakness through near-term trading. We recently wrote that the USD likely set a significant bottom versus the JPY on an important jump in highly-correlated US Treasury Yields. Yet yields have pulled back sharply, while our proprietary Speculative Sentiment Index data warns against buying into Dollar weakness against the Yen.

Our sample shows there are nearly 11 retail traders long USDJPY for every one that is short. Such incredibly one-sided sentiment warns against joining against the crowd in going long USDJPY, but exceedingly low FX market volatility expectations likewise make selling at these levels fairly unattractive. Trading conditions may ultimately favor short-term range trading in the listless USDJPY.

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

To receive the Speculative Sentiment Index and other reports from this author via e-mail, send a message with subject line “Distribution List” to; Contact David via Twitter at

Meet the DailyFX team in Las Vegas at the annual FXCM Traders Expo, November 2-4, 2012 at the Rio All Suite Hotel & Casino. For additional information regarding the schedule, workshops and accommodations, visit the FXCM Trading Expo website.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.