Forex: USD/JPY Risks Fresh 2015 Lows; Retail FX Remains Net-Long

- USD/JPY Retail FX Remains Net-Long; Pair Marks First Oversold Reading Since 2013.

- EUR/USD Continues to Carve Bullish Formation Despite Bets for More Dovish ECB.

- USDOLLAR Continues to Search for Support- June Low (11,732) Up Next?

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USD/JPY

Chart - Created Using FXCM Marketscope 2.0

• USD/JPY remains at risk for a further decline as the Japanese Yen benefits from the pickup in risk aversion; will continue to watch the downside targets as the Relative Strength Index (RSI) dips into oversold territory.
• May see growing speculation for a further expansion of the Bank of Japan’s (BoJ) asset-purchase-program as the region’s Consumer Price Index (CPI) is expected to show a slowdown in price growth, while the care rate of inflation is expected to contract an annualized 0.2% in July.
• Nevertheless, DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long USD/JPY since June8, with the ratio working its way back towards extremes as it climbs to 2.40 as 71% of traders are long.

EUR/USD

• Topside targets remain favored for EUR/USD as it extends the advance from the previous week and continues to carve a series of higher highs & lows, while the RSI pushes into overbought territory.
• Stronger exchange rate paired with weaker energy prices may encourage the European Central Bank (ECB) to adopt a more dovish tone at the September 3 policy meeting; may see President Mario Draghi open the door to further embark on the easing cycle.
• Close above 1.1510 (50% retracement) to 1.1520 (61.8% expansion) may keep the EUR/USD on course to test the next topside objective around 1.1760 (61.8% retracement) to 1.1810 (38.2% retracement.