Yen far from Overbought

by Ashraf Laidi

Dec 20, 2018 18:43

Although USDJPY hit a 3-month low at 110.96, reaching its 100-WEEK MA for the 1st time in 3 months and its 200-DAY MA for the 1st time in 4 months, YEN strength is far from excessive. 1. Positioning. As the CFTC's speculative data on JPY positioning vs USD suggests, JPY remains net short vs USD, but has broken a 6-month trend line resistance, suggesting further reduction in JPY shorts. 2. JPY Trade-Weighted Index from the Bank of Japan is a truer reflection of yen value, rather than USDJPY, which is starting to reflect reduced USD positioning. JPY TWI chart indicates upside breakout ahead (technicals) and 110 is the obligatory next  stop until the next risk-relief rally. After 1 failed attempted, our Premium short in USDJPY opened at 112.70 is nearing the target. Careful near 110.70 for now.   

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