USDJPY Price, News and Analysis:
- Japanese Yen bid as the Covid-19 pandemic fuels risk-aversion.
- USD/JPY looking to set a new multi-month low.
- IG client sentiment is bearish.
The ongoing spread of the Covid-19 virus, and assorted national lockdowns, coupled with the upcoming US election is driving investors into the risk–averse Japanese Yen, sending USD/JPY back towards multi-month lows. In Europe, France and Germany are the latest countries to introduce new national lockdown measures as coronavirus new cases and fatalities hit unwanted records, while a new study in the UK suggests that nearly 100k people a day are catching the virus compared to official figures in the low 20,000s. Stock markets remain under threat of further sharp sell-offs, while the upcoming US presidential elections will likely fuel further short-term volatility going into next week. The market reaction to the election will remain a driving force behind USD/JPY in the days ahead.
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The bid for the Japanese Yen, and the current weakness in the US dollar, can be clearly seen in USD/JPY. The pair seem set to break lower and re-test the September 21 multi-month low of 104.00, despite the CCI indicator flashing an oversold signal. A print below 104.00 will also continue a series of recent lower lows, which when taken alongside the recent lower highs would add another layer of negative sentiment. The USD/JPY 104 level may see the Bank of Japan (BoJ) opine on Yen strength in an effort to curtail its rise, but with the current high degree of short-term volatility, this may not be enough to prevent the pair from moving lower.
USDJPY Daily Price Chart (March – October 29, 2020)
of clients are net long.
of clients are net short.
IG client data show 74.11% of traders are net-long with the ratio of traders long to short at 2.86 to 1.We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/JPY 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 USD/JPY-bearish contrarian trading bias.
What is your view on the Japanese Yen – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.