- Pending orders in 100-pip range from the current market price are neutral (52% bullish / 48% 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
American home re-sales plunged to the lowest level in six months in November following two consecutive months of solid growth, highlighting uneven recovery in the residential real estate. Sales of previously owned homes slumped 6.1% to a 4.93 million annual rate last month, the weakest level since May, down from 5.25 million in the preceding month, the National Association of Realtors said. November's sales, however, edged up 2.1% from the previous year and followed a particularly strong October, when sales rose to their highest level of the year. November's sharp drop is unlikely to signal the beginning of a weakening trend, while partly reflects low inventories, which declined to the lowest level in eight month, providing buyers with limited options. However, that impelled economists to lower the fourth-quarter gross domestic product forecast by at least one-tenth of a percentage point to around a 2.6% annual rate, referring to reduced brokers' commissions.
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.
The most important day of the week is here
Probably, this will be the only day in the week, when some volatility could be anticipated, other than that week will be very calm and tranquil, since the Christmas holidays are starting. Today, on Tuesday, US core durable goods orders, new home sales and nation's final GDP will be released.
USD/JPY surpasses 120 mark
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 breached the psychological level at 120 and it has a potential to trade even slightly higher. Although, a significant move is not likely due to the low volatility. The next target for the pair's bulls is the monthly and weekly R1 at 120.93/94, while it will be underpinned by the major level at 120. Moreover, the weekly technical studies are pointing to the north.
Hourly chart
Open positions neutral, while pending orders move to negative side
Concerning the orders placed 100 pips from the spot, there are now more commands to sell, namely 55%. 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.