REPORT: Speculators Back to Sell Yen – "The Fuel" for USDJPY and EURJPY

Igor Pereira · February 2

Traders, the future positioning data (IMM/CFTC) has just given us a "radiography" of what the great players are doing behind the scenes. While Japanese politics threatens to intervene, speculators are doing the opposite: Selling yen.

By Igor Pereira Financial Market Analyst

The report indicates that Smart Money did not buy the intervention bluff or is taking advantage of the recent fall to reposition itself in the macro trend of Japanese devaluation.

Below, the direct impact of this massive settlement on cross-pairs, illustrated by the IMM positioning chart.

The positioning chart reveals that the "purchasing positions of yen that have been accumulating" are being liquidated aggressively.

The translation: Traders who bet on Yen's discharge last year are throwing the towel. To close a position of purchase of Yen, you need SALE YEN on the market.
The Net Balance: As the purple line shows on the chart ("NET"), the feeling turned to the negative. With a net balance of 33,000 contracts sold, the market is heavily positioned on the selling tip (light blue area expanding). This creates a constant pressure of devaluation.

Math is simple: Sale of Yen = Purchase of Dollar.

Viets: Altista (Bullish) .
Analysis: Settlement of positions purchased in Yen removes the support mattress holding the currency. Without speculative buyers to defend the Yen, USD/JPY is free to recover recent losses.
Scene: We hope the pair will resume their strength towards the 155.00 - 156.00, again challenging the Bank of Japan (BoJ). The recent fall was only a technical correction before the resumption of the main upward trend, fueled by these 33,000 contracts sold.

The euro tends to benefit double: by the intrinsic weakness of the yen and by the flow of Carry Trade.

Viets: Strongly Altista.
Analysis: EUR/JPY is the favorite pair for Carry Trade (borrow yen to buy higher-income assets in Euro). When speculators sell yen, this capital often flows into the euro.
Acceleration: With the selling pressure in the Yen classified as "intense", EUR/JPY must break down immediate resistance. Japan's outflow is financing the purchase of risk in Europe.

The market is testing the determination of the Japanese authorities with real money on the table.

My Vision: Do not operate against the flow of IMM speculators (NET line falling) at this time.

Trend: Settlement of purchased positions confirms that the "fund" of the correction in USDJPY has already been made.
Trade: Search for CURTO-TERM purchases in USDJPY and EURJPY in the recesses to the top. The market is saying that the yen will remain cheap, verbal intervention or not.

There is an exact price at which these 33,000 contracts sold will panic if BoJ intervenes physically. In Premium, we reveal where to place your Stop Loss so you don't get caught in the crossfire and where to position your entrance to surf the "covering wave".

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