Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose. The risks of loss from investing in CFDs can be substantial and the value of your investments may fluctuate. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how this product works, and whether you can afford to take the high risk of losing your money. IG International Limited is licensed to conduct investment business and digital asset business by the Bermuda Monetary Authority.

EUR/JPY to fresh yearly highs but retail not very bullish

EUR/JPY has just traded to a fresh yearly high but retail traders don’t appear to be very bullish.

EUR/JPY talking points

  • EUR/JPY has set yet another fresh yearly high
  • Retail traders don’t appear so bullish with an imbalance of shorts

EUR/JPY fresh yearly highs, retail traders don’t appear very bullish

EUR/JPY has been in the midst of a strong bullish run, gaining more than 1000 pips from the lows in early May. This has been driven by a combination of optimism around Europe as the risk-on trade has went into full bloom, helping to drive Yen weakness on the other side of the pair.

EUR/JPY set yet another fresh yearly high on 13 August, taking out the ¥125.00 psychological level in the process, but retail traders do not appear to be so optimistic as a heavy imbalance of shorts indicates that retail may be trying to call a top here.

Find out more about forex trading

EUR/JPY daily price chart

Taking a step back to look at the longer-term setup in the pair, and retail traders may be attempting to pre-empt a bearish trendline that could soon come into play. This trendline connects 2014 and 2018 swing highs; and for the month of August projects to approximately ¥127.50, which is another major psychological level in the pair.

EUR/JPY monthly price chart

Retail traders heavily bearish, door may remain open for upside

Given the backdrop of what’s become a very strong bullish trend with a possible point of resistance approximately 150 pips away, there could be scope for continued bullish momentum. This is also supported by the current juxtaposition of retail traders in the pair, with approximately 60% of traders in EUR/JPY holding net short positions. We typically take a contrarian view to crowd sentiment, and this could point to further topside in EUR/JPY.

Combining all of these variables indicates the potential for continuation of short-term bullish momentum, with a possible point of pause/resistance showing up around ¥127.50. If/when that price comes into play, the backdrop can be re-assessed as to whether a continued run up to ¥130.00 may be in the cards.


This information has been prepared by IG, a trading name of IG US LLC. This material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion. This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. No representation or warranty is given as to the accuracy or completeness of the above information. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. Any research provided should be considered as promotional and was prepared in accordance with CFTC 1.71 and designed to promote the independence of investment research. See our Summary Conflicts Policy, available on our website.

Start trading forex today

Trade the largest and most volatile financial market in the world.

  • Spreads start at just 0.8 pips on EUR/USD
  • Analyze market movements with our essential selection of charts
  • Speculate from a range of platforms, including on mobile

Live prices on the most popular forex markets


Prices above are subject to our website terms and agreements. Prices are indicative only

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading forex provider.

Stay on top of upcoming market-moving events with our customisable economic calendar.