Forex Flash: USD/JPY IMM longs at an extreme – Westpac

FXstreet.com (Barcelona) - Jonathan Cavenagh of the Westpac strategy team have taken a look at USDJPY and noted that it is currently positioned at extreme levels.

When appreciating net IMM positioning in JPY they note that short JPY positions just below -2 standard deviations (compared to a long term average) and since 2010 such extremes have often proven to represent a turning point in market sentiment and positioning. Coupled with other factors such as lack of US yield support, waning US data momentum and potential disappointment around BoJ actions (or lack of), the team believe USDJPY is vulnerable to near term downside correction.