- Pending orders in 100-pip range from the current market price are neutral (55% bullish / 45% bearish)
- The pair could climb in price, with the closest resistance at 120.93/94 (weekly and monthly R1)
- The downward movement is still possible, but should be limited by the weekly PP at 118.26
- Upcoming events: US Core Durable Goods Orders, US Final GDP, US New Home Sales
The number of Americans seeking first-time unemployment benefits declined in the week before the last one and remained near the lowest level in 14 years, the latest sign of strengthening labour market. Jobless claims fell by 6,000 to 289,000 in the week ended December 13, the fewest since early November, a Labor Department report showed. New applications for unemployment benefits have stayed below the 300,000 threshold in 13 of the past 14 weeks, the longest such streak since the first half of 2000. The four-week moving average, which irons out volatile weekly data, declined by 750 to 298,750. Meanwhile, companies continue to hire more workers and job creation is set for the best year since 1999. The American economy added a seasonally adjusted 321,000 new jobs in November, a separate report showed earlier this month, while the jobless rate was at 5.8%.
Meanwhile, the Bank of Japan kept monetary policy unchanged at its final meeting of the year, opting to assess the effects of the expanded stimulus programme, despite a sharp decline in global oil prices, which jeopardize the central bank's attempts to reach 2% inflation. While economists expect that further monetary easing will be needed next year, the BoJ offered a more optimistic view on the nation's economy. As widely expected, the BoJ decided to keep its pledge to expand base money, or cash and deposits at the central bank, at an annual pace of 80 trillion yen via purchases of government bonds and risky assets. The Monetary Policy Statement showed that the Japanese economy has continued to recover moderately as a trend from the dampening effect of a sales tax hike in April.
Very calm week ahead
This week will be very calm and tranquil, since the Christmas holidays are starting. Nonetheless, there is one day which should be watched - Tuesday, when US core durable goods orders and final GDP will be released.
USD/JPY nears 120 level
At the first half of the year USD/JPY was trading almost completely flat, as it traded around the 102 level. However, at the second part of August the Greenback started to outperform the Japanese peer rather heavily. A few weeks ago the pair breached the 120 mark and for the time being it remains a target for the pair's bulls since the Greenback has slipped below it. Nonetheless, if traders' fail to breach this substantial level then it is likely to trade around 118/119 levels.Daily chart
USD/JPY has recovered since the weak performance at the beginning of the previous week and now is nearing the 120 mark. The bullish pressure is surely growing; although, the mentioned 120 level will not be a small obstacle to face. Nonetheless, we expect the pair to surpass the psychological level, while the technical studies are neutral with only the monthly ones being bullish.
Hourly chart
Open positions neutral, while pending orders positive
The distribution between the buy and sell orders is also quite stable—55% and 45% respectively. It implies that, if USD/JPY continues its advance, then in the near-term it might be stopped by the weekly and monthly R1, possibly it could limit the pair's gains.
However, if the pair changes the direction of its movement downwards then the weekly PP at 118.26 could stop the drop.
Spreads (avg,pip) / Trading volume / Volatility
Community expects Yen to appreciate towards 120
Likerty, one of the community members participating in the survey, anticipates the pair's moves to be determined by the major 118.70 level "118.70 is a major technical level derived from historical range, so comebacks from above could be possible. 122.50's is a pivotal level of it's upcoming range-deep bearish corrections may fallow."
Meanwhile, traders, who were asked regarding their longer-term views on USD/JPY between Nov 11 and Dec 11 expect, on average, to see the currency pair at 121.20 by the mid-March. However, the largest portion of participants, namely 15% of them, believe the exchange rate will gain either to 121.50/123.00 or 124.50/126.00 in sixty days. Only 25% expect the USD/JPY cross to slide below the current market value.