- 55% of all pending orders are to acquire the US Dollar
- 55% of traders hold short positions
- The nearest resistance is at 112.60
- Immediate support rests around 111.70
- Upcoming events: US Existing Home Sales and FOMC Meeting Minutes
New home sales in the United States dropped more than expected last month, probably amid weaker demand. The Department of Commerce reported on Tuesday that sales of new houses dropped 11.4% to a seasonally adjusted annualised pace of 569K units in April, following the prior month's upwardly revised pace of 642K units, the highest since October 2007, and falling behind expectations for a decrease to a 611K-unit pace. On an annual basis, new home sales were up 0.5% in April. The average selling price dropped to $309.2K in April from $318.7K seen in the preceding month. Despite April's unexpected drop, analysts suggested that the housing market maintained its momentum and would continue growing in the upcoming months, supported by low mortgage rates.
New home sales plunged in all four regions; however, the largest drop of 26.3% was registered in the West. The inventory level rose 1.5% to 268K units last month, the highest since July 2009. AT the past month's sales pace it would likely take 5.7 months to sell all houses available on the market.
US Existing Home Sales and FOMC Meeting Minutes
Wednesday is not rich with fundamental data releases, as only the US Existing Home Sales are due. They 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. However, most focus will be on the FOMC Meeting Minutes report. FOMC stands for the Federal Open Market Committee, which organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.
USD/JPY keeps edging higher
The USD/JPY pair edged higher yesterday, but managed to overperform, as it breached the immediate resistance area. As a result, the US Dollar is now likely to keep appreciating against the Yen, even though technical indicators are unable to confirm that. The nearest area to limit the gains now rests around 112.60, represented by the monthly R1, the 20 and the 100-day SMAs, but the Buck could experience trouble reaching that far up. Technical indicators in the daily timeframe, however, are unable to confirm the possibility of the positive outcome, but in the longer timeframes they do suggest the Greenback is to keep climbing higher.Daily chart
Even though the USD/JPY pair breached the broadening rising wedge's support line on the hourly chart, it is still reluctant to keep moving lower, continuing to press to the upside. However, the 200-hour SMA is now dangerously close and could spark another bearish reaction, for which the FOMC Minutes could be the catalyst today. This would confirm the outlook of the pair moving back to 109.00.
Hourly chart
There are 55% of traders holding short positions (previously 60%), while the share of buy orders remains unchanged at 55%.
At the moment, 62% of OANDA clients are long the US Dollar against the Yen, while the remaining 38% are short. In addition, Saxo Bank clients' sentiment remained unchanged in the last 24 hours, as 59% of their open positions are still long.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between April 24 and May 24, traders expect the US Dollar to appreciate to 112.70 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 67% of all forecasts fall above 111 yen, which is still below the current spot price. The majority of people who voted expect the US Dollar to cost somewhere either between 112.50 and 114.00 yen, or between 115.50 and 117.00 yen in three months, with 20% of survey participants choosing each of these trading ranges. Furthermore, the 105.00-106.50 and the 114.00-115.50 ranges were the second most popular ones, with 13% of the voters choosing each of them.