- SWFX market sentiment is 63.50% bearish
- 51% of pending orders in 50-pip range are set to buy
- 57.25% of all pending orders are to buy the Greenback
- The closest sizable support is located near 111.38
- Upcoming Events: Day of silence
Monthly data on the US Building Permits contributed to the second straight day of gains in the USD/JPY currency pair. Experts anticipated the number of building approvals to rebound to 1.20M in June, expecting an increase in future construction despite higher costs for materials. The report showed that housing sector strengthened as building permits and housing starts advanced more than expected to 1.25M and 1.22M, respectively. It can be noticed on the chart that the USD/JPY exchange rate moved 0.5% higher when the data was released. Strong figures suggested that builders continued to be confident in the US housing industry's ability to keep expanding, while demand for new lots outpaced market supply. The USD/JPY ended Wednesday's session at 111.96.
The US Producer Price Index for final demand nudged up 0.1% in June on the back of sustained increases in services cost that managed to offset plunging energy prices, data released by the Labour Department revealed on Thursday. In 12 months through June, the PPI advanced 2.0%, down 0.4% from May's reading, as the energy-led spike was dropped out of the calculation. Meanwhile, the Core Finished Goods PPI advanced a modest 0.1% over the reported period, missing economists' expectations for a 0.2% uptick and following the 0.3% surge registered in May. Overall, economists suggested that the weaker-than-expected reports are set to diminish expectations for the Fed to raise interest rates for the third time this year, with inflation being the main uncertainty factor to define the course of further monetary policy changes.
Day of silence for the buck
An announcement of information on the ECB Minimum Bid Rate caused a great anxiety in the markets yesterday. For this reason, the last day of this trading week will pass quietly, with no other macroeconomic data releases that might the US Dollar or the Japanese Yen.
USD/JPY fails to bypass 100-hour SMA
Contrary to expectations, an impulse given by an exit from a rising wedge pattern was not strong enough to push the currency pair to a closest combined resistance level formed by the 200-hour SMA and the weekly PP at 113.09. Namely, the currency pair soared to the 100-hour SMA near 112.30 but then rapidly fell back to the weekly S1 at 111.70. The new attempt to recover the lost ground failed as well, as the pair encountered a combination of the 20- and 55-hour SMA near 111.97. An early Friday morning shows that the above weekly S1 still does not let the rate to fall further and pushes it to make another attempt to climb upstairs. But in case of a third failure, the freefall of the rate should be stopped by the monthly PP 111.38.Hourly chart
Contary to expectation, the currency pair stopped a rebound from a combined support level formed by the 55-, 100- and 200-day SMAs and fell directly to the weekly S1 at 111.69. Such result of the Thursday's trading session led to dissolution of a one week long descending channel. If the pair fails to recover the lost positions, a further downfall to the monthly PP at 111.38 might follow in the next week.
Daily chart
The bearish market sentiment still dominates in this trading session, even though the number of all short positions slipped to 63.50%, compared to 65% on Wednesday. Moreover, 57.25% of pending orders are to buy the US Dollar.
OANDA clients turned to be neutral on the US Dollar, as 51% of all open positions are long. Similar views also hold Saxo Bank clients, whose long positions amounts to 53.20, compared to 52.40% yesterday.