- Pending orders in 100-pip range from the current market price have narrowed (53% bullish / 47% bearish)
- The pair could climb in price, with the closest resistance at 119.38
- The downward movement is still possible, but should be limited by the weekly S1 and monthly PP at 116.91/75
- Upcoming events: US CPI, US FOMC Statement and Conference, US Federal Funds Rate
US housing starts and building permits dropped in November, but the underlying trend points to consistently improving housing market, albeit the recovery appears to be uneven. Groundbreaking declined 1.6% in November from the preceding month to a seasonally adjusted annual rate of 1.028 million units, the Commerce Department reported. October's housing starts were revised up to a pace of 1.045 million units. Meanwhile, building permits, a leading indicator of construction, dropped 5.2% to 1.035 million in November. Housing market recovery continues to be restrained by tepid wage growth, which has been far outpaced by home price gains.
Meanwhile, With the Japanese economy struggling to recover after the April's sales tax hike but no obvious contenders proposing a more effective fiscal strategy, voters backed up Prime Minister Shinzo Abe's Liberal Democratic Party on Sunday to proceed with reforms known as Abenomics. In Sunday's snap election, the conservative Liberal Democrats, which have ruled for most of the post-World War II era, was reported to gain a solid majority of at least 291 seats. Abe called the snap elections last month even though his approval ratings were faltering due to several scandals and data that confirmed that the Japanese economy had officially fell into recession.
US inflation data anticipated
Important data from US are awaited, since the newest inflation data will be released and also later on the FOMC will meet for a press conference and their statement. US consumer price index is expected to decline from the previous month and that could hurt the US currency.
USD/JPY underpinned by monthly PP
At the first half of the year USD/JPY was trading almost completely flat, as it traded around the 102 level. However, at the second part of August the Greenback started to outperform the Japanese peer rather heavily. Recently, the pair breached the 120 mark and for the time being it remains a target for the pair's bulls since the Greenback has slipped below it. Nonetheless, if traders' fail to breach this substantial level then it is likely to trade around 118/119 levels.Daily chart
After a brief dip below the weekly S1 and monthly PP at 116.92/75 yesterday, USD/JPY rebounded above the support levels. The pair is likely to sustain its positions above the previously mentioned support levels and to climb higher. The technical indicators have not changed since yesterday, as the weekly and monthly ones remain neutral, while the daily ones are negative.
Hourly chart
Open positions and pending orders stay neutral
At the same time the gap between the buy (53%) and sell (47%) orders is narrowing. It implies that, if USD/JPY rebounds, in the near-term it may be stopped by the weekly PP and possibly it could push the pair lower.
However, if the pair continue to retreat, most likely it will be stopped by the weekly S1 and monthly PP 116.91/75.
Spreads (avg,pip) / Trading volume / Volatility
Community expects Yen to appreciate towards 120
Likerty, one of the community members participating in the survey, anticipates the pair's moves to be determined by the major 118.70 level "118.70 is a major technical level derived from historical range, so comebacks from above could be possible. 122.50's is a pivotal level of it's upcoming range-deep bearish corrections may fallow."
Meanwhile, traders, who were asked regarding their longer-term views on USD/JPY between Nov 11 and Dec 11 expect, on average, to see the currency pair at 121.20 by the mid-March. However, the largest portion of participants, namely 15% of them, believe the exchange rate will gain either to 121.50/123.00 or 124.50/126.00 in sixty days. Only 25% expect the USD/JPY cross to slide below the current market value.