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Japanese Yen Forecast to Rally until this Changes

Japanese Yen Forecast to Rally until this Changes

David Rodriguez, Head of Product
Japanese Yen Forecast to Rally until this Changes

Why and how do we use the SSI in trading? View our video and download the free indicator here

USDJPY – Retail FX traders are extremely long the US Dollar versus the Japanese Yen, and a contrarian view of crowd sentiment warns the USD/JPY could continue onto fresh lows. Indeed, the ratio of open long to short positions stands at a substantial 3.4:1—the largest such extreme since the pair traded near ¥101 through the second half of 2014.

We will continue to forecast USD/JPY declines until we see a substantial shift in retail trader positions. It is possible that such one-sided sentiment points to a major extreme and potential price reversal. Yet such moves are only clear in hindsight; it seems unwise to join the crowd as it buys into such sharp declines.

See next currency section: XAUUSD - Gold Prices May Break to Fresh Highs

Written by David Rodriguez, Quantitative Strategist for DailyFX.com

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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.

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