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Is the Japanese Yen a buy, or headed lower?

JPY- Yen

Fundamental Analysis

Rising Number in Short Positions

When looking at the COT report on the Japanese Yen, there is an increase in the number of short positions taken by big money. Right now, only 17% of institutions are long JPY showing an overall short bias against the yen. Another thing that could be hurting the yen is the fact that the overall sentiment in USD rose last week alongside the stock market. COVID relief is happening more efficiently in the US over Japan and Europe as of now, and risk-on sentiment seems to be affecting JPY more negatively than the USD.

Jobs Numbers and Vaccine Rollout

Over the span of Biden's presidency, over 100 million vaccines were distributed in the US a month and a half ahead of schedule. Biden says he plans to double the number of vaccines distributed so far this year. This, along with the higher than expected jobs numbers in the US seems to be enough to take the yen down further.

Technical Analysis

USD/JPY 1D chart

On the daily chart here for USD/JPY, the pair has been in a very strong uptrend since the beginning of this year. This strong movement suggests that price has significant momentum to the upside after breaking yearly highs in early March. Now the pair is tested along some heavier resistance around 109.774 which will prove to be a key level in the pair's direction. If price doesn't break, it can find support around the low 108.000s, but if we see a break above, there could be a lot more room to the upside for this pair.

Retail Sentiment

Most of the retail segment looks to be bullish on the yen even though demand is continually getting crushed by big money shorting the currency. Although retail is looking for a change in direction, it looks like that may not happen in the near future.

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