- The number of orders to sell the Buck is completely unchanged at 65%
- Bullish market sentiment takes up 70% of the market
- The weekly PP at 112.11 represents immediate resistance
- Support is the Bollinger band around 111.29
- 63% of the survey participants expect the US Dollar to cost less than 114 yen in three months
- Upcoming events: US Existing Home Sales, Japanese Flash Manufacturing PMI, US Flash Manufacturing PMI
The US Dollar's performance was almost identical to the Sterling's, as the Buck appreciated against all major peers on Friday and over the weekend. The Greenback added the most against the Kiwi (0.84%), followed by a 0.53% rally versus the Aussie and 0.43% versus the Euro. Mild gains of 0.22%, 0.20% and 0.14% were registered against the Loonie, the Swissie and the Yen, respectively, whereas the Cable edged 0.04% higher.
US consumer confidence unexpectedly worsened in March for the third consecutive month due to concerns of increasing petrol prices and mounting expenses, while the complex labour market situation is undermining any rise in salaries and wages, even though increasing number of people are being employed. The Thomson Reuters/University of Michigan preliminary Consumer Confidence Index dropped to 90.0 points in March, compared with the final 91.7 seen in the prior month, when it had declined to a fresh three-month low. The consumer confidence index reached its all-time high in January 2000, at 112, decreasing thereafter. The gauge has never climbed above 100 again since 2004.
Meanwhile, St. Louis Fed President James Bullard said that the Fed's inflation and employment goals have essentially been met and it would be "prudent" to hike interest rates. Bullard was among the majority of Fed officials who voted to keep rates on hold at the central bank's two-day meeting last week, and he has expressed concern recently about a decline in inflation expectations. However, those expectations have been moving higher lately, and Bullard said that he now feels "inflation net of the oil price shock is reasonably close to target." Yet, he did not indicated when the next interest rate hike should occur.
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.
Another quiet Monday
As far as Monday's go, today once again there are no significant economic data releases to influence the USD/JPY currency pair. Since there is a Bank holiday in Japan, the only event that is likely to have some impact is the US Existing Home Sales. The Existing Home Sales, released by the National Association of Realtors, provide an estimated value of housing market conditions. As the housing market is considered as a sensitive factor to the US economy, it generates some volatility for the USD.USD/JPY hovers over 111.00
As was anticipated, the USD/JPY currency pair recovered from its intraday low on Friday, but was unable to post significant gains, due to the Bollinger band providing sufficient resistance. However, the Bollinger band acts as the immediate support today, providing the Greenback with a chance to begin its recover against the Japanese Yen. The nearest resistance to limit the gains rests at 112.11, namely the weekly PP. According to technical indicators, the US Dollar is to remain relatively flat for another day, thus, neither significant level is likely to be broken today.Daily chart
Ever since the USD/JPY currency pair somewhat rebounded from the February low, it struggled to fully regain the bullish momentum. The pair is consolidating between the Feb low and the 111.70 level, for a breach out of which a strong impetus Is required.
Hourly chart
Bulls remain in control
Bulls also dominate the OANDA market, where 64% of open positions are long (67% on Friday). The sentiment as reported by SAXO Bank is keeps improving - 61% of currently open positions are long, up from 59% recorded on Friday.
Spreads (avg, pip) / Trading volume / Volatility
More than a half expect the exchange rate to fall under 114 yen
The majority (63%) now assumes that the US Dollar is to cost less than 114.00 yen after three month time. The most popular choice implies that the Greenback is either to cost somewhere between 106.50 and 108.00 yen in three months, selected by 21% of the voters. According to the votes collected between Feb 21 and March 21, the mean forecast for June 21 is 112.48. At the same time, 15% of the surveyed believe the Greenback could fall in the 114.00-115.50 price interval after a three month period.