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USDJPY –Retail FX crowds have bought into the most recent US Dollar sell-off versus the Japanese Yen, and a contrarian view of crowd sentiment warns the pair may test fresh lows.
Trade Implications – JPY Pairs: The USDJPY break above key resistance at ¥102.75 initially left us in favor of further strength. Yet traders remain indecisive, and indeed it seems as though the exchange rate could go on to test February lows near ¥101. Given that FX volatility prices remain near their lowest levels since the onset of the global financial crisis in 2007, we view major breaks in either direction as unlikely.
Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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