- SWFX market sentiment is 53% bearish
- 63% of pending orders in 100-pip range are set to sell
- Significant resistance is located circa at 111.3860
- Upcoming Events: US Core Durable Goods Orders m/m, US Unemployment Claims, US Durable Goods Orders m/m, Japanese Household Spending y/y, Japanese Unemployment Rate, Japanese Retail Sales y/y
Following a release of the FOMC statement, the US Dollar lost ground against the Japanese Yen, sending the currency pair down to the 111.70 area from earlier highs located above 112.00. As it was widely expected by the market, the Federal Reserve decided to leave its interest rates unchanged, keeping the target range for the Federal Funds Rate between 1.00% and 1.25%.
However, the FOMC appeared to be concerned over inflation once again, saying that inflation has generally declined and is running below the Fed's 2% target. Furthermore, due to a lack of hawkishness of the statement and no clear hints on how the process of the balance sheet shrinkage will evolve, the market sentiment regarding the US economic outlook remained relatively subdued.
US Core Durable Goods Orders
The most important fundamental events affecting the given currency pair are scheduled for 1230GMT, namely, the monthly US Core Durable Goods Orders and the weekly US Unemployment Claims. In addition, the US is likewise to release monthly Durable Goods Orders, Goods Trade Balance and preliminary Wholesale Inventories at the same time. Late in the evening, Japan is to publish monthly Household Spending, National Core CPI and Unemployment Rate at 2330GMT and monthly Retail Sales at 2350GMT.
USD/JPY forms symmetrical triangle
Thursday's morning started relatively calm, as USD/JPY was driven by low volatility for most of the session. It met resistance at the 200-hour SMA which was eventually breached, thus allowing the US Dollar to approach the upper boundary of a symmetrical triangle. However, strong downside risks pressured the rate for a plunge down to the lower boundary of this pattern. The Greenback subsequently made a U-turn, demonstrating its willingness to edge higher once again. The closest resistance cluster is formed by the monthly PP and the 100-hour SMA circa 111.40, while the 20-, 55– and 200-hour SMAs are not distant either. In case nothing shakes the market unexpectedly, the pair is likely to push up to the 200-hour SMA where it may meet hindrance or even halt its upward motion. Bottom limit—110.50.Hourly chart
The US Dollar was driven by a strong momentum downwards on Wednesday, thus falling below the 55- and 100-day SMAs and the weekly and monthly PPs. The pair closed at the 111.20 mark and had already traded lower on Thursday morning. By and large, it is likely that the rate remains between the weekly PP and S1; however, fundamentals may change this prediction either direction.
Daily chart
The bearish market sentiment still dominates in this session, as the number of open positions is 53% short (55% on Wednesday). Meanwhile, 52% of pending orders are to buy the US Dollar.
OANDA clients remain bullish on the pair, as 56% of all open positions are long. Likewise, similar viewpoint is held by Saxo Bank clients who hold 52% long positions.