- SWFX market sentiment is 54% bullish
- 53% of pending orders in a 100-pip range are to sell
- Significant support is located at 111.10
- Upcoming events: US Existing Home Sales, FOMC Economic Projections, FOMC Statement, Federal Funds Rate, FOMC Press Conference, BOJ Policy Rate, Japan's Monetary Policy Statement
The US economic reports caused a temporary depreciation of USD/JPY during the Tuesday session. The Greenback lost against the Japanese Yen 10 base points or 0.09% to be seen trading near the 111.37 mark, though the decrease was not sustained as figures failed to impress the market.
The Commerce Department revealed that the US building permits rose to the strongest level in seven months over the course of August with the total number of 1.30M permits issued. The property market was moving ahead before an expected transitory hit from Hurricanes Irma and Harvey. Though, the number of permits in damaged areas was not significantly weaker, housing could stay a drag on the US economy in the third quarter.
Fed and BOE statements
The focus of this trading session is undoubtedly the US Federal Open Market Committee which is to release some significant information at 1800GMT, namely its Economic Projections for inflation and economic growth of the US economy, its Statement and Federal Funds Rate. The press conference is scheduled for 1800GMT. Meanwhile, the Bank of Japan is to release its Monetary Policy Statement and the Policy Rate early on Thursday. The time, however, is tentative.
USD/JPY tries to break below 111.26
Even though in the early Tuesday morning the pair moved quite confidently towards the weekly R1, which is located at the 112.07 level, in second half of the day it made a rebound and did not go above the 111.90 mark anymore.Surprisingly, but a release of better than expected American housing data did not led to appreciation of the Greenback against the Yen. Such outcome suggests considering a possibility of transformation of a dominant ascending channel into a rising wedge. However, even if the new pattern will take the lead this fact should not change the general yesterday's scenario.
On the other hand, the relevance of this pattern will greatly depend on the Fed's decision that will be made later this day.
Hourly chart
USD/JPY closed almost flat on Tuesday, being stranded between the 200-day SMA and the weekly R1 from above and the monthly R1 and the 100-day SMA from below circa 112.20 and 111.20, respectively. The following 24 hours are marked by important releases from the central banks of both the US and Japan, thus significant reaction to either of these events is likely to breach the aforementioned areas.
Daily chart
The bullish market sentiment has slightly weakened on Wednesday, as 54% of traders are holding open positions (-4%). Meanwhile, 55% of current pending orders are to sell the US Dollar (-2%).
The bullish market sentiment still dominates OANDA, with 51% of its clients having long positions (-6%). In addition, 53% of Saxo Bank traders are likewise holding long positions (unchanged from Tuesday).