USD/JPY in tight range between 101.00 and 102.50

Source: Dukascopy Bank SA
  • The share of buy orders edged down from 76 to 63%
  • Bullish traders' sentiment returned to its previous Monday's level of 67%
  • Resistance rests around 102.75
  • The weekly PP and the 20-day SMA around 100.20 represent immediate support
  • 63% of the survey participants expect the US Dollar to cost less than 105.00 yen in three months
  • Upcoming events: US CB Consumer Confidence, Japanese Preliminary Industrial Production

The Federal Reserve's favourite measure of inflation held steady in the seventh month of the year, official data revealed on Monday. According to the Bureau of Economic Analysis, the Personal Consumption Expenditures Price Index, excluding the volatile food and energy components, rose 1.6% year-over-year in July, unchanged from last month, while market analysts anticipated a slight decrease to 1.5% in the reported month. On a monthly basis, the core PCE grew 0.1% in July, in line with analysts' expectations and the previous month's reading. The overall PCE advanced 0.8% on a yearly basis in the same month, following June's 0.9% and meeting market forecasts. The data also showed that personal spending climbed 0.3% on a monthly basis in July, down from June's upwardly revised 0.5% gain, whereas personal income jumped 0.4% on the same basis in July, compared to last month's upwardly revised 0.3% hike. Both readings came in line with analysts' projections.

Federal Reserve Chairwoman Janet Yellen left the door open for a hike this year during her speech in Wyoming, arguing that the US economy created a lot of jobs lately and it is on a moderate growth path, despite recent disappointing economic data.

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US CB Consumer Confidence

Tuesday is rather poor in terms of economic data releases, with the only relevant and important one being the US CB Consumer Confidence. The US CB Consumer Confidence captures the level of confidence that individuals have in economic activity. A high level of consumer confidence stimulates economic expansion, while a low level drives to economic downturn. A quiet before the storm, as tomorrow all attention will be on the ADP Non-Farm Employment Change.



USD/JPY in tight range between 101.00 and 102.50

On Monday the USD/JPY currency pair remained relatively unchanged, but still edged below the 102.00 major level. Nevertheless, the pair appears to be anchored around the 102.00 mark, with the lower border represented by the cluster around 101.20, represented by the 20-day SMA and the weekly PP. At the same time, a strong resistance area circa 102.75, formed by the weekly R1, the Bollinger band and the 55-day SMA, is likely to limit any possible gains. According to technical indicators no significant movements are expected to occur, therefore, suggesting that the pair is to consolidate between the mentioned borders.

Daily chart

© Dukascopy Bank SA

After a rather strong rally on Friday, the USD/JPY currency pair eased on its movements and is expected to remain in limbo around the 102.00 mark until another market mover emerges. Impetus for more movement could be provided by the upcoming US employment data.

Hourly chart
© Dukascopy Bank SA


Traders are generally long the US Dollar

Bullish traders' sentiment returned to its previous Monday's level of 67%, whereas the share of buy orders edged down from 76 to 63%.

Sentiment at Saxo Bank is virtually the same - 67% of the Denmark-based clients are currently holding long positions. Traders at OANDA are slightly less confident in Dollar's appreciation - as many as 66% of open positions are long. Using the data as a contrarian indicator, the sentiment implies a cheaper Dollar. There is little room for new buyers to enter the market, and if the bulls start closing positions on profit-taking, this could create a strong selling pressure.


Spreads (avg, pip) / Trading volume / Volatility

More than a half expect the exchange rate to fall below 105.00 yen

© Dukascopy Bank SA

Slightly more than half of the surveyed (63%) now assume that the US Dollar is to cost less than 105.00 yen after a three month time. The most popular choice, however, implies that the Greenback is to cost between 108.00 and 109.50 yen in three months, selected by 18% of the voters. According to the votes collected between July 30 and August 30, the mean forecast for November 30 is 103.18. At the same time, 12% of the surveyed believe the Greenback could cost either between 103.50 and 105.00 yen or even more than 109.50 yen in three months.

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