Persistent Net-Long USD/JPY Positioning Instills Bearish Outlook

Video length: 00:07:56

USD/JPY

Chart – Created Using FXCM Marketscope 2.0

• USD/JPY may make a more meaningful run at the monthly opening range as it appears to be preserving the upward trend carried over from August, but the recent series of lower highs & lows accompanied by the bearish trigger in the Relative Strength Index (RSI) undermines the rebound from 99.53 (August low) especially as the broader outlook for the exchange rate remains tilted to the downside.
• Even though the Bank of Japan (BoJ) remains under pressure to further embark on its easing cycle, with market participants looking for more non-standard measures in 2016, Governor Haruhiko Kuroda and Co. may largely endorse a wait-and-see approach at the September 21 interest-rate decision as central bank officials deliver their ‘comprehensive assessment’ of the economy operating under the negative-interest rate policy (NIRP).
• Move back below former resistance around 101.20 (50% expansion) may threaten the rebound from 99.53 (August low), which corresponds with the next downside area of interest coming in around 99.70 (61.8% expansion).

• The DailyFX Speculative Sentiment Index (SSI) shows the FX crowd remains net-long USD/JPY since July 22, with the ratio hitting a 2016-extreme during the previous month as it climbed to +5.28.
• The ratio currently sits at +2.83 as 74% of traders are long, with short positions 38.3% lower from the previous week, while open interest stands 14.4% below the monthly average.

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US DOLLAR(Ticker: US Dollar):