I have been trading Forex for the last 4 years. One of the easiest pairs to trade is the USD/JPY. If you want to know where it’s headed next, just pay attention to the S&P 500. The Japanese Yen is a safe haven currencies, so if the S&P 500 is going up, it means a risk on environment and so the USD/JPY should go up. If the S&P 500 is going down, it means a risk off environment and so the USD/JPY should go down.
Still, Street consensus favors a continued rally in the currency pair. According to RBC Capital Markets, Commodity Futures Trading Commission data showed speculative traders increased their bets against the yen for the week ending April 2, to net 62,700 contracts, making it the second-most shorted currency behind the euro EURUSD, -0.0089%
Outsize speculative positions — long or short — often serve as a contrarian indicator for some investors because a move against the pack can lead to traders covering their positions, accelerating the move.
“Our negative-JPY view is driven mainly by the expected behavior of investors in Japan in response to the rate hikes the Fed has already delivered and the evidence we have around the turn of the fiscal year suggests we are right to stick with it,” Adam Cole, chief currency strategist at RBC noted, comparing the attractiveness of U.S. bond yields to Japanese yields.
Lets go to the charts to see if the price actions supports further upside.
Monthly Chart (Curve Time Frame) – monthly supply is 121.000 and monthly demand is 97.000.
Weekly Chart (Trend Time Frame) – the trend is sideways
Daily Chart (Entry Time Frame) – the chart suggests to short price if price rises to the daily demand at 112.60.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.