- 70% of all open positions are long
- The share of buy orders dropped from 52 to 29%
- The weekly S1 at 101.37 is the nearest support
- Weekly and monthly PPs, along with the 20 and 55-day SMAs, form resistance around 102.30
- Upcoming events: US Building Permits, US Housing Starts
Consumer prices in the United States rose more than expected last month, official data revealed on Friday. According to the US Bureau of Labor Statistics, the overall Consumer Price Index (CPI) jumped 0.2% month-over-month in August, compared to the preceding month's reading of 0.0%, while market analysts anticipated a slighter acceleration to 0.1% during the reported month. On an annual basis, the CPI increased 1.1%, up from July's 0.8%. The so-called core CPI that excludes goods with high price volatility, such as food and energy, advanced 0.3% on a monthly basis in August after rising 0.1% in July, whereas economic desks expected the core inflation to grow 0.2% last month. On a yearly basis, the indicator climbed 2.3% during the reported period, slightly up from July's 2.2% reading. The modest rise in inflation last month is likely to be welcomed by the Federal Reserve at its meeting next Tuesday and Wednesday.
However, it is widely expected to leave interest rates on hold amid weak retail sales, industrial production and job growth. Within the headline CPI basket, the price of gasoline dropped 0.9% last month, compared to July's 4.7% fall. Food prices were unchanged, whereas the cost of food consumed at home decreased for the 4th consecutive month.
No events until Tuesday
Monday is going to be quiet in terms of fundamental data. However, on Tuesday attention should be paid to the US Building Permits and Housing Starts, due at 12:30 pm GMT. The Building Permits are released by the US Census Bureau and show the number of permits for new construction projects. It implies the movement of corporate investments (US economic development). It tends to cause some volatility to the USD. Normally, the more growing number of permits, the more positive (or bullish) for the USD. The Housing Starts, on the other hand, is an annualised number of new residential buildings that have already begun construction during the preceding month.Japanese banks will be closed on Monday in observance of Respect-for-the-Aged Day.
USD/JPY likely to fall under 102.00
Despite a better-than-expected US CPI, the US Dollar failed to post solid gains on Friday. Today, however, the pair's potential to edge higher is limited, due to a tough resistance area located right on top of the opening price. Moreover, the USD/JPY currency pair remains in a down-trend, which only weighs on the pair's ability to appreciate. From below the Greenback is supported by the weekly S1, which is located at 101.37. However, a much stronger cluster lies around 100.60, represented by the monthly S1, the 50% Fibo, the weekly S2 and the Bollinger band. Meanwhile, technical indicators are giving mixed signals in the daily timeframe.Daily chart
According to the hourly chart, the USD/JPY currency pair could decline towards 101.60, where a one-month up-trend is located. However, if the pair manages to overcome the 200-hour SMA resistance, the 102.70 level could also be reached. In either case, the pair is likely to remain more or less in consolidation until the FOMC meeting later this week.
Hourly chart
Today 70% of all open positions are long, unchanged since Friday. The share of buy orders, on the other hand, dropped from 52 to 29%.
There has been an increase in the number of long positions at other brokers as well. Right now two thirds of OANDA clients are bulls, up from 65% recorded last Friday. Saxo Bank clients, however, are less bullish than on Friday, being that the portion of longs declined from 68 to 65%.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish the Dollar
According to the poll that gathered forecasts between August 19 and September 19, traders expect the US Dollar to appreciate to 105.16 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 78% of all forecasts fall above 102 yen, which is the current spot price. By far the most popular interval is 109.50-111.00, chosen by 16% of all the surveyed, compared to popularity of the 102.00-103.50, 103.50-105.00, 106.50-108.00 and 108.00-109.50 intervals.