Japanese Yen Could Fall even Further
Why and how do we use the SSI in trading? View our video and download the free indicator here
USDJPY– A substantial reversal in the Japanese Yen has been met with a notable shift in retail trader positioning, and indeed our data shows that traders are now their least net-long the USD/JPY in nearly two months.
We typically take a contrarian stance to retail positioning; if ‘the crowd’ is long we prefer to be short and vice versa. And indeed our data shows that retail traders have remained net-long USD/JPY virtually without interruption as the pair has traded near decade-plus highs above ¥125.
The fact that traders remain long the USD/JPY suggests the broader downtrend is intact, but total short interest has surged 87 percent in the past seven days and gives us pause in our calls for weakness. Until we see a resumption in retail buying we will likely stick to the sidelines in trading the USD/JPY.
See next currency section: XAUUSD - Gold Prices Could Continue Higher Despite Warning Sign
Written by David Rodriguez, Senior 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.