- The portion of buy orders increased from 50 to 57%
- Market sentiment remains bearish at 56%
- Immediate resistance lies around 119.25
- The closest support rests around 116.80
- Upcoming events: US Existing Home Sales, US Crude Oil Inventories
Both building permits and housing starts dropped more than expected last month, suggesting that the Q4 growth rate could be possibly revised downwards. According to the US Department of Commerce, new-home construction fell 18.7%, the biggest decrease in almost two years, to a seasonally adjusted annual rate of 1.09 million units in November, while market analysts anticipated a slight deceleration to 1.23 million during the reported period. Housing starts tend to be volatile on a monthly basis. Meanwhile, the October figure was revised up to a 1.34 million-unit pace, the highest level since July 2007, from the originally reported 1.32 million. The Commerce Department also reported that building permits declined 4.7% to an annualized rate of 1.20 million units, following October's upwardly revised reading of 1.26 million, whereas economists expected them to decrease to a 1.24 million-unit pace.
Nevertheless, the National Association of Homebuilder's sentiment measure, released on Thursday, jumped to 70 points in December, the highest level in 11 years, compared to the previous month's figure of 63. December's increase was driven in large part by Donald Trump's surprise victory in the US presidential elections last month.
US Existing Home Sales unlikely to have a serious impact
There are no significant events due until Thursday, however, today some attention could be paid to the US Existing Home Sales. They are released by the National Association of Realtors and provide an estimated value of housing market conditions. As the housing market is considered as a sensitive factor to the US economy, it generates some volatility for the USD. Generally speaking, a high reading is positive for the Dollar, while a low reading is negative. The change is expected to be minor, thus, having a very limited effect on USD pairs.USD/JPY in tight range between 117.00 and 118.50
Once again the US Dollar managed to retain its position above the 117.00 major level, having inched higher against the Japanese Yen yesterday. According to technical indicators, the USD/JPY currency pair is likely to climb higher again. On the other hand, if the bullish scenario prevails the Buck could struggle to reclaim the 118.50 level, as several unsuccessful attempts were made over the last two weeks. Moreover, a strong resistance area is located slightly further, represented by the Bollinger band, the monthly and the weekly R1s. As a result, despite bullish signs, the base case scenario is another decline of approximately 70 pips.Daily chart
For the third consecutive week now the US Dollar has been outperforming the Japanese Yen, steadily climbing higher. For quite some time now the pair remained above the trend-line, rather than reconfirming it. As a result, risks of the up-trend getting pierced are somewhat higher, while the 200-hour SMA is now bolstering the given trend-line, implying that the bullish trend is likely to remain intact for now.
Hourly chart
Market sentiment remains bearish, now at 56% (previously 54%). Meanwhile, the portion of buy orders increased from 50 to 57%.
Meanwhile, there has been a decrease in the number of long positions at other brokers. Right now 56% of OANDA clients are bears, compared to 53% on Tuesday. In the meantime, Saxo Bank clients are slightly on the bearish side, being that the portion of shorts takes up 52% of the market.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish the Dollar
According to the poll that gathered forecasts between November 21 and December 21, traders expect the US Dollar to appreciate to 116.09 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 64% of all forecasts fall above 114 yen, which is close to the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 117.00 and 118.50 yen in three months, with 16% of the survey participants choosing this trading range. Meanwhile, the second most popular intervals is the 120.00-121.50 one, with 14% of the votes, also followed by the 118.50-120.00 interval, chosen by 12% of all the surveyed.