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USDJPY: Retail trader data shows 56.6% of traders are net-long with the ratio of traders long to short at 1.3 to 1. In fact, traders have remained net-long since Jul 18 when USDJPY traded near 114.004; price has moved 2.3% lower since then. The number of traders net-long is 3.1% lower than yesterday and 19.0% lower from last week, while the number of traders net-short is 6.4% higher than yesterday and 7.0% 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 Christopher Vecchio, CFA, Senior Currency Strategist
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