- SWFX market sentiment is 67% bullish
- Pending orders in the 100-pip range are 61% to BUY
- The Fed Rate
The Buck has failed to breach the resistance against the Japanese Yen, which was mapped on Monday, as the long term descending trend line has held the ground. However, the fundamentals of the US Dollar are about to change drastically, as the Fed is expected to hike the Federal Funds Rate later in the day.
The US Census Bureau revealed on Friday that the US building permits data did not meet expectations, showing the growth pace of only 1.30M units in February, following the downwardly revised 1.38M reading in the prior month.
The stronger-than-expected fall in the US homebuilding was caused by a plunge in the multi-family housing construction offsetting a rise in single-family projects for the second month in succession.
Federal Funds Rate
In regards to the macroeconomic events this week, all attention will be on the GBP. The morning releases are set to be covered by the Dukascopy research team.
Meanwhile, the markets expect a US rate hike to occur later in the day. The Fed is expected to increase the base rate from 1.50% to 1.75% at 18:00 GMT. That should cause a surge in the US Dollar.
USD/JPY consolidates circa 106.60
Demand for the US Dollar increased on Tuesday which was boosted by positive growth in the US Treasury bonds. As a result, bulls pushed the rate past the 200-hour SMA and bounded it between this moving average and a trend-line near the 106.50 area.Technical indicators favour the prevalence of the bearish sentiment today, as already indicated by a slight period of consolidation. From purely technical point of view, the Greenback should continue fluctuating between two trend-lines and thus target the 105.80 area within the following days.
However, it is likely that traders are reluctant to breach the 200-, 55– and 100-hour SMAs prior to the FOMC statement at 1800GMT.
Given today's fundamentals, a possible trading range is relatively wide, i.e., between 106.00 and 107.00.
Hourly Chart
We have been expecting for a long time to finally spot a new long term pattern on the USD/JPY daily chart. It seems that something has been spotted.
Namely, the latest rebound provided the needed second reference point for a lower trend line of an ascending channel pattern. However, the drawn pattern is a very speculative one, as the upper trend line of it needs to be confirmed above the 107.00 mark.
Daily chart
SWFX traders are still on the long side, as 67% of open positions were bullish during the morning hours. However, trader set up orders remain bullish, as 56% of trader set up orders were to buy the US Dollar in favour to the Japanese Yen.
Meanwhile, the market sentiment of OANDA traders remains strongly bullish with 71% long positions. In addition, Saxo bank traders are 59% bullish in regards to this pair.
Spreads (avg, pip) / Trading volume / Volatility