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USDJPY – Choppy price action in the Japanese Yen has made for similarly inconsistent shifts in trader sentiment, and we will wait for a decisive move in the USDJPY to establish a clear trading bias.
Trade Implications – JPY Pairs:The majority of traders remained short USDJPY from when it traded above ¥103 through August until it broke below ¥107 two weeks ago. Since then we’ve seen the crowd consistently buy into Dollar weakness versus the Yen, and indeed at the time we wrote that the Japanese Yen looked like a strong buy versus major counterparts.
Yet listless price action has watered down our forecast for further JPY strength, and a recent build in USDJPY selling acts as early signal the pair will likely continue higher.
See next currency section:AUDUSD – Australian Dollar Likely to Break Lower versus Greenback
Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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