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USDJPY – A significant shift in trader sentiment warns that the US Dollar may be on the cusp of a major breakout versus the Japanese Yen.
Trade Implications – JPY Pairs: The USDJPY consolidated for just over six months and is attempting to break out. We sense a bit of déjà vu; we saw a very similar stretch of range-bound price action in 2013 before making a 700-point run towards multi-year peaks.
An oversimplified extrapolation puts the USDJPY as high as ¥109 in two months’ time. Though this admittedly seems unlikely, the substantial swing in sentiment suggests this could be the start of a much larger move. The fact that so few expect the major breakout may in fact make it more plausible.
See next currency section:AUDUSD - Australian Dollar Poised for Further Losses
Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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