- The percentage of buy orders went up, now 80% of all pending orders are set to acquire the Buck
- Bulls increased their advantage over bears, as 61% (previously 60%) of all positions are now long
- 30% of traders see USD/JPY above 124.5 by June
- Nearest resistance is represented by the 2014 high at 121.84, while closest support is still the monthly R1 at 121.07
- Upcoming events: US Crude Oil Inventories, US FOMC Statement, US Federal Funds Rate, US Sec Lew Speech, US FOMC Press Conference
US housing starts plummeted in February by the most in four years as extreme weather forced American construction companies to cut down on the number of building sites. Groundbreaking tumbled 17% to a seasonally adjusted annual rate of 897,000 units, recording the lowest level since January 2014, according to the Commerce Department. However, January's starts were revised upwards to a 1.08 million unit pace, compared with the previously estimated 1.07 million units. February plunge was likely to be temporary as permits for future construction rose 3% in the reported month to a 1.09 million annualized pace, the fastest pace since October, following a 1.06 million rate a month earlier. A surge in building permits was driven by applications for multifamily units, suggesting single-family construction, which accounts for the major part of the housing market, will continue to struggle going forward. Starts of single-family properties plummeted 14.9% to a 593,000 rate in February. Meanwhile, construction of multifamily projects including condominiums and apartment buildings plunged 20.8% to an annual rate of 304,000.
While increasing employment and low borrowing costs have helped the industry gain steam, sales remain limited by insufficient supply of cheaper homes and weak wage growth.
Joshua Mahony, Market Analyst from IG Group, thinks that the monthly report from BoJ is not going to have much of an effect and therefore it is whittling down between the interest rate decision and statement. He also does not reckon that any change will be made in terms of the interest rate decision and QE programme, as he ponders that "they are going to wait and see in terms of whether the CPI really is going to be impacted significantly, because of the downturn in oil, and really whether those effects from oil are going to be temporary or they are going to have influence upon the medium term expectation."FOMC Statement at 6:00 PM GMT
Today the Fed is going to release a monetary policy statement and make a press conference, which might strengthen the US Dollar if the rhetoric of the central bank proves to be hawkish. Before that the Energy Information Administration is to inform on the situation with the crude oil inventories (expected to decline by half a million).
USD/JPY barely moved for the second day
The US Dollar remained relatively unchanged against the Japanese Yen. The currency slightly added in value, but the price stayed close to the weekly PP level for the second day. By the end of Tuesday the Greenback was at 121.35. However, despite a lack of momentum, USD/JPY is expected to keep trundling north, as implied by the technical studies. The nearest resistance remains the same, namely the 2014 high at 121.84.
Daily chart
USD/JPY keeps fluctuating between 121.20 and 121.46. At the moment the pair is in a bearish correction and is approaching the moving average, which might provide some support.
Hourly chart
Sentiment slightly stronger
Bulls increased their advantage over bears, as 61% (previously 60%) of all positions are now long. Meanwhile, the percentage of buy orders also went up. Now 80% of all pending orders are set to acquire the Buck.
Liquidity consumer confidence at OANDA improved, as now 59% of participants are long the Greenback. The SAXO Group clients' sentiment is quite similar, as 58% of all positions are long.
Spreads (avg, pip) / Trading volume / Volatility
30% of traders see USD/JPY above 124.5 by mid-May
Dukascopy Community members assume the USD/JPY currency pair is going to slump further, as more than 61% of all votes are still bearish. As predicted by the traders, USD/JPY may close around 120.1 level this Friday.
Geula4x, a member of the community, has a positive outlook towards the Buck. For him the USD/JPY pair seems quite bullish on the daily chart, and he mentioned that "the price broke above 120.48 area, which has been a previous resistance area and moved significantly higher towards 121.28 area." At the same time, Likerty, another survey participant, thinks that the US Dollar will trip against the Yen. He suggests that the Yen has no room for bullish oscillations and "a major mid-term bear correction is coming, with the 109 area in mind."