Bullish Dollar Breakout Hinges on Bearish Sentiment Easing
Japanese Yen – Retail forex traders remain long the US Dollar against the Japanese Yen, and the rate at which they’re abandoning their longs during the recent rebound suggests that it might have further to run.
Trade Implications – JPY Pairs: The rebound in the USDJPY comes as the SSI ratio has swung quickly back towards a less bearish outlook, even as the most readily available CFTC Commitment of Traders data shows that large futures speculators remain heavily short JPY futures (long USDJPY).
With sentiment normalizing from levels that produced the last major bottoms in price in April and June 2013, we suspect that it is possible that the workings of another major bottom might be forming. We’re watching for clues in the USDJPY immediately.
--- Written by Christopher Vecchio, Currency Analyst for DailyFX.com
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