- The number of sell orders increased from 51 to 56%
- Bullish traders' sentiment returned to its Monday's level of 74%
- 200-day SMA and the weekly PP around 113.35 represent immediate resistance
- Support is the rising support line at 112.91
- 54% of the survey participants expect the US Dollar to cost less than 114 yen in three months
- Upcoming events: US Building Permits, US CPI and Core CPI, US Housing Starts, US Capacity Utilization Rate, US Industrial Production, US Crude Oil Inventories, FOMC Statement, US Federal Funds Rate, BoJ Kuroda's Speech
In spite of somewhat stronger US Retail Sales figures, the Greenback failed to appreciate against all major currencies, such as the Euro, the Swissie and the Yen. BoJ's statement strengthened the Yen versus the US Dollar, causing the USD/JPY to drop 0.56%. Against the Euro only a 0.06% loss was detected, while the USD/CHF remained completely unchanged. Gains, on the other hand, were registered versus the commodity currencies, namely 1.12% against the Kiwi, 0.75% versus the Aussie and 0.72% against the Loonie. Another notable rally of 1.07% was seen against the British currency, amid the return of ‘Brexit' fears.
Americans are showing renewed signs of caution due to ongoing financial-market turbulence, as retail sales declined last month and January's increase was revised to a drop. According to the Commerce Department, retail sales fell 0.1% in February to a seasonally adjusted $447.31 billion as automobile purchases decreased and cheaper gasoline lowered receipts at service stations. Moreover, January's figure was revised down to a 0.4% decline from the 0.2% gain previously reported. Core retail sales, which correspond most closely with the consumer spending component of GDP, were unchanged in February. The data could give the US central bank more reason to maintain interest rates on hold on Wednesday, when the Fed is due to release its latest policy statement. Following the data release, economists lowered their first-quarter GDP growth estimates by a percentage point to as low as a 1.9% rate. Retail sales are a key indicator of overall consumer spending, which makes up for about two-thirds of the US economic output. Still consumer spending remains buoyed by an improving labour market and rising house prices.
A separate report showed the producer price index declined 0.2% in February on lower energy and food costs, after climbing 0.1% in January. Measured on an annual basis, the reading remained unchanged after sliding 0.2% in January.
Vatsal Srivastava, director at the Blackwater Consulting, explains why the US Dollar is a advancing against the Yen this week. Even though he says that there was nothing fundamentally driving USD/JPY on Monday, one of the key drivers is the falling oil prices, which is actually boosting the Yen, in his opinion, as there is an addition cause for more QQE. Vatsal Srivastava also mentions that "it is going to be a hard economic ride ahead and there seems to be no light on the horizon for Japan as of now". "Lets hope for the best," he added.
US data to worsen
There are a number of US related data today, that is expected to have a significant impact on the USD/JPY pair. The most important events are the FOMC Meeting and the Fed Interest Rate Decision. The Board of Governors of the Federal Reserve announces an interest rate. This interest rate affects the whole range of interest rates set by commercial banks, building societies and other institutions for their own savers and borrowers. It also tends to affect the exchange rate. Concerning the economic data releases, the US CPI is due. The Consumer Price Index is released by the US Bureau of Labor Statistcs and is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchase power of USD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. The Core CPI, however, excludes Food and Energy. Both CPIs are forecasted to worsen, prior to the Fed meeting.USD/JPY on the verge of breaking the triangle pattern
The BoJ retained its negative rate policy yesterday and, thus, strengthened against the US Dollar, causing the USD/JPY currency pair to drop 65 pips. Although the pair is on the edge of breaking its triangle pattern, there is a chance that the volatility will remain contained within the triangle's support and resistance trend-lines. Technical indicators are giving mixed signals, supporting this probability. On the upper side the Buck is also facing the weekly PP at 113.50, which is to contribute to keep the pair's volatility contained, while the triangle's lower border is non-less fragile, being bolstered by the weekly S1 and the 113.00 psychological level.Daily chart
As was expected, the USD/JPY pair managed to regain the bullish momentum yesterday, despite a small breach of the support line. Consequently, a breach to the downside is now more likely, which might be triggered by the Fed's statement later today.
Hourly chart
Bulls remain in control
Bulls also dominate the OANDA market, where 65% of open positions are long (63% yesterday). The sentiment as reported by SAXO Bank is only marginally bullish - 59% of currently open positions are long, up from 56% recorded 24 hours ago.
Spreads (avg, pip) / Trading volume / Volatility
More than a half expect the exchange rate to rise above 114 yen
The majority (54%) now assumes that the US Dollar is to cost more than 114.00 yen after three month time. The most popular choice implies that the Greenback is to rise above 120.00 yen in three months, selected by 19% of the voters. According to the votes collected between Feb 16 and March 16, the mean forecast for June 16 is 114.26. At the same time, 16% of the surveyed believe the Greenback could fall in under 108.00 yen after a three month period.
Dukascopy Community members are suggesting the pair will highly appreciate during this week. The price will most likely hit 114.1 by this Friday, as 80% of members are having bullish outlook. Despite bullish outlook, this price is slightly below last week's average price of 115.
A member of the Dukascopy Community under the nickname westline suggests that the Yen has been very strong for the last month. "But since economic data is weakening, this could result to a short decline in the near-term", he warned.
Meanwhile, Likerty commented: The USD/JPY is preparing for a final test of the lows, around 111.60 mark."