USD/JPY: Upside Risks Post-Golden Week Holidays On Retail Investors’ Position Unwinds – NAB

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Dollar/yen is losing some ground as Japan is on holiday. What’s next?

Here is their view, courtesy of eFXdata:

NAB Research discusses USD/JPY tactical outlook and flags a scope for upside after the end of the Golden Week holidays in Japan.

“We noted that Japanese retail FX traders were running extended net long TRY/JPY (and ZAR/JPY) positions into the start of Golden Week – a 6-day holiday period during which the TFE, Gaitame.com and other margin trading exchanges will remain open. This is seen to entail some risk of a repeat of the January 3rd JPY-related ‘flash crashes’ in the event we see violent moves in TRY (or ZAR) this week. But maybe more pertinent is that retail investors are running record short USD/JPY positions on the TFE  – perhaps in part as a defensive strategy during Golden Week (or indeed to benefit from another flash crash event),” NAB notes.

“As such, if we are spared a stronger JPY this week, there must be a risk that position unwinds by retail investors support a stronger USD/JPY next week and beyond, at a time when the stronger USD environment in any event suggests that the risks to the prevailing ¥110.50 to ¥112.85 range lies to the upside,” NAB adds,

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Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

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