- 53% of all pending orders are to purchase the Greenback
- 52% of all open positions are short
- Immediate resistance lies at 117.39
- The closest support rests at 116.30
- Upcoming Events: US Initial Jobless Claims, US Goods Trade Balance, US Crude Oil Inventories
US pending home sales dropped unexpectedly last month to the lowest level since January 2016, official figures revealed on Wednesday. The National Association of Realtors reported its Pending Home Sales Index fell a seasonally adjusted 2.5% to 107.3 in November, following the preceding month's rise of 0.1% to 110.0 points, while market analysts anticipated a slight acceleration of 0.5% during the reported period. On an annual basis, the Index declined at an annualized pace of 0.4%. In regional terms, sales jumped 0.6% in the Northeast, but dropped 2.5% in the Midwest, 6.7% in the West and 1.2% in the South during November. According to NAR Chief Economist Larry Yun, the sharp rise in mortgages rates and shortages on the housing market were the main driver of the decline last month.
As a result, the EUR/USD pair fell to 1.0394 from 1.0398 ahead of the release, while the GBP/USD declined to 1.2210 from 1.2217. Meanwhile, the US Dollar Index, which tracks the Greenback's performance against a group of six other currencies, remained unchanged at 103.67.
Relatively quiet end of the year
On Thursday attention could be paid to the US Initial Jobless Claims. They are a measure of the number of people filing first-time claims for state unemployment insurance. In other words, it provides a measure of strength in the labor market. A larger than expected number indicates weakness in this market, which influences the strength and direction of the US economy. Another possible event will be the Crude Oil Inventories. It is a weekly measure of the change in the number of barrels in stock of crude oil and its derivates. This report tends to generate large price volatility, as oil prices impact on worldwide economies, affecting the most, commodity related currencies, such as Canadian Dollar. Despite it having a limited impact among currencies, this report tends to affect the price of oil itself, and, therefore, have a more notorious impact on WTI crude futures.USD/JPY remains in a bearish trend
After a rather strong six-week rally the USD/JPY currency pair began to slide down, being in a bearish trend for two weeks now. A strong decline of approximately 100 pips today would confirm a descending channel pattern by establishing its lower trend-line. The trend-line would pass right between the weekly S1 and the 20-day SMA, making that a strong demand area. However, technical indicators are in favour of the positive outcome, implying the Buck could still recover from its current intraday low of 116.23. Nevertheless, such scenario would still provide material for the descending channel pattern to be emerged.Daily chart
Wednesday ended with the exchange rate easily piercing the up-trend and the 200-hour SMA support area, following with bears pushing the pair even lower today. On the hourly chart there is no solid psychological or any other support to back the outlook of the daily chart.
Hourly chart
Traders' sentiment is close to being neutral, as there are only 52% of all open positions being short and the remaining 48% being long. The majority of all pending orders, 53%, are to purchase the Greenback.
Right now 56% of OANDA clients are bears, compared to 54% Wednesday. In the meantime, Saxo Bank traders turned slightly bullish, being that 52% of their open positions are long and the remaining 48% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between November 29 and December 29, traders expect the US Dollar to appreciate to 117.99 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 60% of all forecasts fall above 117 yen, which is close to the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 120.00 and 121.50 yen in three months, with 16% of the survey participants choosing this trading range. At the same time, the second most popular interval was the 118.50-120.00 one, with 14% of survey participants choosing it.