- SWFX market sentiment is 73% bullish (+3%)
- 53% (-5%) of pending orders in the 100-pip range are set to BUY
- Upcoming events: US CPI and Core Retail Sales
The decline, which was caused by the regulatory news in Japan, had extended itself during the first half of Wednesday's trading session. If anyone requires a reminder, the Japanese regulators announced that they will push for a law to decrease FX retail leverage from 1:25 to 1:10. This was expected by some to increase the strength of the Yen.
The USD/JPY exchange rate fell slightly on the Federal Budget Balance report, as the data provoked almost no reaction in the market.
The US government posted a $49B budget surplus in the month of January, the Treasury Department stated on Monday. The report also showed that the US fiscal gap rose 11% to $175.7B in the four month period to January, compared to the same period a year ago.
The gap is anticipated to widen further as an aging population increases spending on retirement programs and healthcare. The proposed budget released on Monday revealed the deficit widening to $984B in 2019, assuming that Congress would adopt all of the President Trump's proposals, including cuts of spending.
Data on Wednesday
Today there will be a major data release occurring at 13:30 GMT in the US. Namely, the US CPI and US Retail Sales data sets and their associate data will be published at the same time. This data release is set to influence the financial markets through the strength of the US Dollar.
The release is set to be covered by the Dukascopy Research team on the bank's live webinar platform. Tune in by clicking on the notification on the Dukascopy trading platforms. Or one can just google the Dukascopy webinars.
USD/JPY plunges to yearly low
The strong bearish pressure that dominated the USD/JPY exchange rate on Tuesday continued to prevail in this session, as well.The pair showed some signs of a recovery during yesterday evening; however, the unsuccessful test of the weekly S1 at 107.81 sent the pair for a further plunge down to the weekly S2. As a result, the Greenback reached a new 2017/2017 low of 106.85.
Technical indicators have been sent in the strongly oversold area; thus, a possible recovery up to the 55– and 100-hour SMAs near 108.50 might be due in the nearest time.
However, bears could likewise be reluctant to abandon their positions and therefore continue pressuring the US Dollar lower down to the bottom boundaries of two descending channels near the 106.00 area.
Hourly Chart
There is an important development, which has occurred on the daily chart of the USD/JPY currency pair. Namely, the currency pair has broken past the dominant and strong support cluster, which was located just below the 108.00 mark.
The previously mentioned increase of Yen's fundamental strength and the resumption of the US Dollar's decline have pushed the rate below the technical levels. Due to that reason expect a full review of the large scale charts in the near future.
Daily chart
SWFX traders are on the long side, as 73% of open positions were bullish during the morning hours (+3%). In addition, 64% of pending orders are to buy the Greenback.
The market sentiment of OANDA traders remains strongly bullish with 67% long positions (-5%). Saxo Bank clients are likewise bullish, as 52% of open positions are long (-4%).
Spreads (avg, pip) / Trading volume / Volatility