- Swiss market sentiment is 53% bearish
- 51% of pending orders in the 100-pip range are set to SELL
- US Retail Sales at 12:30 GMT
On Wednesday morning, the USD/JPY managed to break the upper trend line of a dominant descending pattern. Due to that reason in the near term a full review of the technical charts will be conducted.
The Bureau of Labor Statistics released Consumer Price Index data that came in line with expectation of 0.2%. The CPI rate stays unchanged, repeating itself from period to period.
The Capital Economics' senior US economist Michael Pearce said. "Our forecast is that core inflation will continue to trend higher from here, with core PCE inflation hitting 2.3 per cent by the end of this year. With economic growth strong and inflation overshooting, the Fed will continue hiking interest rates once a quarter over the coming 12 months."
US Retail Sales at 12:30 GMT
On Wednesday, the US Dollar's strength will influence the price of various financial instruments and currency exchange rates. Namely, at 12:30 the US Retail Sales will be published. The data release cover will begin on the bank's live webinar platform at 12:20 GMT.
USD/JPY manages to surge
The US Dollar has gained 121 pips against the US Dollar since the beginning of this week. Being supported by the 100-hour SMA, the rate managed to breach the weekly PP and the 200-hour SMA and test the weekly R1 at 111.50 early today. This level coincides with the 200-period (4H) SMA.At the time of this analysis, the Greenback was stranded in a narrow range between this long-term moving average and the 55– and 100-period SMAs between 111.10 and 111.35.
The following hours will determine which force is to prevail today, i.e., a surge in the corresponding direction is expected to follow. Technical indicators are in favour of the bearish scenario with the nearest target being the 110.80 level. It is likewise possible that this pressure from both sides leaves the rate with no big changes.
Hourly Chart
The previously drawn descending pattern on the daily chart has been broken. This is one of the cases, where the forecast has been wrong. Namely, the US Dollar has gained strength across all charts and the USD/JPY was no exception.
Daily chart
Swiss traders remained bearish on the pair on Wednesday. However, only 53% of open positions were long, compared to the previously 64% short SWFX market sentiment.
In the meantime, 52% of trader set up orders are set to buy the US Dollar in favour to the Japanese Yen.
Saxo Bank traders are still shorting the USD/JPY, as 58% of set up orders at the brokerage are short. Meanwhile, OANDA traders are 57% long on the pair.
The drastic change in the SWFX sentiment during the last trading sessions reveals that the retail trader sector must be taking advantage of the intraday movements on the hourly chart.
Spreads (avg, pip) / Trading volume / Volatility