Analys från DailyFX
USD/JPY Price Analysis: Strong Bounce on YTD Low Zone, US Data Jumps
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Highlights:
- USD/JPY technical strategy: JPY may become a preferred short vs. bouncing USD
- 2017 extreme day range acting as strong support pair
- Recent low shows exhaustion a bounce is a favorable view toward 111.60
- IGCS shows the USD/JPY trend ready for next major move with reduced open interest
USD/JPY is working on a strong bounce from a familiar area. For the year of 2017, JPY has strengthened against weaker currencies like the US Dollar. For a while, everything was going wrong for the USD, but things may soon turn around. It is not that the US economy is roaring like a lion, but rather expectations may have become too grim, and a return to the mean is in the process. Whether the mean will be lower than last time, helping to solidify a downtrend is yet to be seen.
Recently, we saw from CFTC CoT positioning data that hedge funds are adding to an already aggressive short USD position. On Tuesday, US Retail Sales data posted the best print since December, which is coming after NY Fed President Bill Dudley said he would go ahead and support a 2017-rate hike before the year ends if data picks up. The dual effect to the USD to the highest level in four weeks.
The market seems at odds, but the path of least resistance, at least for the short term may turn higher for USD/JPY. We see that the JPY strength that was catapulted by the threats and back and forth rhetoric from North Korean’s Kim Jung Un and US President Trump is appearing hollow, and as such risk-off assets like sovereign bonds and gold are pulling back. After a test of $1,300/oz., Gold is working on its biggest loss in six weeks, helped by the strong US Dollar. As the demand for haven assets curbs, it is difficult to get excited about a further drop in USD/JPY. This expectation for further USD/JPY gains holds especially true when you look at the chart below.
On the chart below, you will notice that USD/JPY is bouncing higher off a highlighted zone. The highlighted zone is specifically the extreme day range for 2017 on April 17 when USD/JPY traded at its lowest level for the year. The April 17 range was a low of 108.13 with a daily high of 109.05. We have recently bounced off 109, and we could see a rather sizable bounce higher to the middle of the range near 111.6 and possibly to the top of the range near 114. Either way, until the range support break, which would be validated by a daily close under 108.13 or we come to the top of the range, it is difficult to get excited about buying JPY against USD.
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Chart Created by Tyler Yell, CMT
USD/JPY IG Trader Sentiment:USD/JPY trend ready for next major move with reduced open interest
What do retail traders’ buy/sell decisions hint about the JPY trend? Find out here!
USDJPY: Retail trader data shows 72.0% of traders are net-long with the ratio of traders long to short at 2.58 to 1. In fact, traders have remained net-long since Jul 18 when USDJPY traded near 112.524; price has moved 1.9% lower since then. The number of traders net-long is 9.9% lower than yesterday and 6.2% lower from last week, while the number of traders net-short is 1.9% lower than yesterday and 13.6% lower 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. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed USDJPY trading bias.(Emphasis mine)
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Written by Tyler Yell, CMT, Currency Analyst Trading Instructor for DailyFX.com
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What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
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You can follow Paul on Twitter at@PaulRobinonFX.
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EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
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Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
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