USDJPY – Retail forex trading crowds remain long the US Dollar (ticker: USDOLLAR) versus the Japanese Yen, but a significant shift in positioning suggests that the USDJPY set a significant bottom through September.
Overall retail short interest in the USDJPY has surged a further 50 percent since last week, while long interest has fallen 17 percent through the same stretch.
Our proprietary Speculative Sentiment Index shows that there remain 2.9 retail traders short for every one long—normally giving us a contrarian bearish trading bias. Yet the substantive shift in trader positioning is enough to call for further USDJPY strength.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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