- 50% of all pending orders are to buy the Buck
- 63% of traders are bears
- The nearest resistance is at 113.38
- Immediate support rests at 112.90
- Upcoming events: US Empire State Manufacturing Index, US Building Permits, US Housing Starts, US Capacity Utilization Rate, US Industrial Production
Consumer prices in the United States advanced last month but less than analysts expected. The Labour Department reported on Friday that its CPI rose 0.2% in April, following the preceding month's drop of 0.3% but missing expectations for a 0.3% gain. Furthermore, the so-called core inflation rate climbed 0.1% last month, compared to the previous month's fall of 0.1%, whereas analysts anticipated an increase of 0.2%. However, both figures pointed to a tightening labour market and solid inflation growth, suggesting that the Federal Reserve will likely raise interest rates at its June meeting. April's inflation rebound was mainly attributable to the oil price rebound. Other data released by the Commerce Department showed retail sales rose 0.4% in April, following the prior month's upwardly revised gain of 0.1% and falling behind forecasts for a 0.6% increase.
Meanwhile, core retail sales, which exclude volatile items, climbed 0.3%, unchanged from the preceding month's upwardly revised reading, while analysts anticipated a 0.5% climb. According to the Atlanta Fed, the economy is set to expand 3.6% in the Q2 of 2017.
Uneventful Monday
There are no important events on Monday really, with the only relevant data release being the US Empire State Manufacturing Index, which gauges business conditions for New York manufacturers. On Tuesday, traders could focus on the UK inflation data and the US housing market figures, such as the Building Permits and Housing Starts.
USD/JPY sets off with a rally
The USD/JPY currency pair appears to have topped out last week, with the 114.40 mark being the reversal point. Poor US fundamentals contributed to the U-turn, causing the Greenback to weaken further against the Yen. However, due to the pair opening with a bearish gap today, the Buck managed to regain some of its bullish momentum, paving its way towards erasing Friday's losses. Technical indicators support this possibility, but the 114.00 major level is still expected to be out of reach. Overall, this recovery is likely to be a minor setback in the US Dollar's bearish trend, as demand, represented by the 200-hour SMA, which caused the reversal, should not succeed again this week.Daily chart
On the hourly chart the pair is seen sliding down after the resistance line was touched nearly a week ago. The 200-hour SMA managed to limit the losses for now, but another attempt to breach it is likely to be successful, as the pair is bound to retest the wedge's lower boundary and breach it to the downside eventually.
Hourly chart
Today 63% of traders are bears (previously 65%), while all pending orders are equally divided between the buy and the sell ones.
Right now 50% of OANDA clients are bulls, losing three percentage points from before, first time the sentiment turned neutral in a long time, now risking to turn bearish. In the meantime, Saxo Bank clients manage to retain a neutral outlook towards the US Dollar, being that 51% of their open positions are now short and the remaining 49% are long.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between April 15 and May 15, traders expect the US Dollar to appreciate to 111.28 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 57% of all forecasts fall above 111 yen, which is still below the current spot price. The majority of people who voted expect the US Dollar to cost somewhere between 112.50 and 114.00 yen in three months, with 15% of the survey participants choosing this trading ranges. At the same time, the second most popular intervals were the 114.00-115.50 and the 115.50-117.00 ones, with 13% of survey participants forecasting each of these trading ranges.