Given Recent Shift in Sentiment, USDJPY Strength May Continue
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USDJPY: Retail trader data shows 73.8% of traders are net-long with the ratio of traders long to short at 2.81 to 1. In fact, traders have remained net-long since Dec 29 when USDJPY traded near 113.0; price has moved 5.1% lower since then. The number of traders net-long is 4.5% lower than yesterday and 0.8% higher from last week, while the number of traders net-short is 9.2% higher than yesterday and 18.5% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USDJPY prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current USDJPY price trend may soon reverse higher despite the fact traders remain net-long.
--- Written by Dylan Jusino, DailyFX Research
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.