27% Lower Net-Short Suggests Prices May Continue to Drop

IG Client Sentiment

Net-Short is 27% Lower From Last Week

USDJPY: Retail trader data shows 66.7% of traders are net-long with the ratio of traders long to short at 2.0 to 1. In fact, traders have remained net-long since Dec 18 when USDJPY traded near 112.836; price has moved 4.5% lower since then. The number of traders net-long is 12.2% lower than yesterday and 2.0% higher from last week, while the number of traders net-short is 14.9% lower than yesterday and 27.5% lower from last week.

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USDJPY Sentiment Gives a Strong Bearish Bias

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USDJPY prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger USDJPY-bearish contrarian trading bias.

— Written by Fan Xu, DailyFX Research

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