US Dollar Positioning Warns of Risks versus Yen
View Real-Time SSI Updates via the FXCM Trading Station Desktop
See a video on why we use the Speculative Sentiment Index as a contrarian indicator in our trading
USDJPY – Retail FX traders are heavily long the US Dollar versus the Japanese Yen, and a contrarian view of crowd sentiment warns that the USD/JPY may test further lows. Indeed the current ratio of open long positions to short positions is a notable 2.6 to 1—near the extremes seen through USD/JPY tumbles through late August.
We see pivotal USD/JPY support at the ¥119 mark, and a recent drop in FX volatility prices suggests that a major breakdown remains unlikely. Yet it’s likewise clear that a clear move lower would likewise coincide with a significant jump in broader USD volatility, and traders should proceed with caution as the pair nears key price levels.
See next currency section:AUDUSD - Australian Dollar Downtrend Remains Intact
Written by David Rodriguez, Quantitative Strategist for DailyFX.com
To receive the Speculative Sentiment Index and other reports from this author via e-mail, sign up for his distribution list via this link.
Contact David via
Twitter at http://www.twitter.com/DRodriguezFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.