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USDJPY– Retail FX traders are once again aggressively net-long the US Dollar versus the Japanese Yen, and a contrarian view of ‘crowd’ sentiment points to further losses. It was just last week when we cited an abrupt shift in sentiment as a reason the USD/JPY may in fact reverse higher. That proved short-lived, however; the much larger downtrend remains intact.
We will thus remain bearish until we see more concrete signs of a Dollar turnaround versus the Japanese Yen. Recent USD price action leaves it vulnerable across the board. And recent market focus on the US Federal Reserve keeps the Greenback in limbo through the foreseeable future. All else equal, we prefer to be short USD/JPY until we see a substantive shift in USD sentiment.
See next currency section: EURUSD - Euro Outlook Remains Cautiously Bullish until this Changes
Written by David Rodriguez, Senior Strategist for DailyFX.com
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