- The portion of orders to acquire the US Dollar fell to 57%
- Market sentiment remains bullish at 65%
- Immediate resistance lies at 111.60
- The closest support rests at 110.94
- Upcoming events: US JOLTS Job Openings, Japanese Core Machinery Orders, Japanese PPI
On Monday, Janet Yellen, the Chairman of the US Federal Reserve, delivered a speech on monetary policy at the University of Michigan. She noted that country went through a long and severe recession, as the Fed failed to identify growth of systemic risks, which made the country's financial system very vulnerable. Nevertheless, she believed that the Central bank's course of recovery was chosen correctly, with unemployment standing now at 4.5% and inflation fluctuating just above the targeted 2%. These figures showed that the economy was growing at a moderate pace. She noted that consumer spending remained the main driver of economic growth but added that there were significant improvements in housing and investment.
The similar picture was observed in terms of the global economy, which also became more robust and healthier. Altogether, the Federal Reserve Chair suggested that the economy would continue developing at a modest pace. Thus, the Fed's main objective should be to sustain the achieved result, i.e. full employment, and stabilize inflation around 1.75%-2%. She noted that if the economy continues to perform in line with the Fed's objectives, it would gradually raise short-term interest rates in the upcoming months.
Another relatively quiet day
Today among US fundamentals only the JOLTS Job Openings are due, but are unlikely to have solid impact on the USD/JPY pair's performance, thus, more focus should be on the Japanese Core Machinery Orders. They are the total value of machinery orders placed at major manufacturers in Japan. They are legally binding contracts between consumers and producers for delivering goods and services. The report is considered the best leading indicator of business capital spending, and increases are indicative of stronger business confidence and, therefore, as larger the number is, the positive it tends to be for the currency, while a negative reading is understood as a drop in growth.USD/JPY continues to consolidate for the third week
The USD/JPY currency pair surprised with its performance on Monday, as it erased all intraday gains and trade closed in the red zone. However, the pair managed to retain its position above the weekly pivot point, but technical indicators keep implying the Buck is to post more losses against the Yen today. Nevertheless, the 110.50 level is expected to be the lowest closing point, even though volatility is likely to stretch even lower. In case the psychological 110.50 mark fails to limit the losses, the weekly S1 at 110.28 is expected to succeed.Daily chart
The bullish momentum acquired on Friday was insufficient for the USD/JPY to keep edging higher, as the pair appears to have topped out near 111.50. However, a rebound is expected to take place near the 110.45 mark, where the two-week up-trend is located at. Given the lack of potential market movers today, the up-trend is likely to remain intact.
Hourly chart
Although not as strong as yesterday, market sentiment remains bullish, now at 65% (previously 70%). Meanwhile, the portion of orders to acquire the US Dollar lost three percentage points over the day, having fallen to 57%.
Right now 62% of OANDA clients are bulls, unchanged since Monday, the bullish sentiment has been holding around the same level for some time now. In the meantime, Saxo Bank clients retain a positive outlook towards the US Dollar, being that 68% of their open positions are now long and the remaining 32% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between March 11 and April 11, traders expect the US Dollar to appreciate to 113.19 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 51% of all forecasts fall under 114 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 108.00 and 109.50 yen in three months, with 17% of the survey participants choosing this trading range. At the same time, the second most popular interval was the 115.50-117.00 one, with 13% of survey participants choosing it.