- SWFX market sentiment is 67% bullish
- Pending orders in the 100-pip range are 65% to BUY
- US CPI and FOMC Meeting Minutes
On Wednesday morning the USD/JPY currency exchange rate remained near the previous week's end levels. However, on the hourly chart one could spot that an ascending pattern had formed in the aftermath of the currency exchange rate's encounter of the 200-hour simple moving average.
The Bureau of Labor Statistics revealed better-than-expected data in producer price index in March. It was mainly led by the increase in costs of an airline and healthcare services, pointing out to the wholesale inflation pressures.
Economists give their opinion about inflation being pushed towards the Fed's two percent target at the end of this year in a form of the weak dollar, tight labor market and fiscal stimulus.
Inflation and monetary policy
The main day of the week has arrived. There are two top priority events to watch during the day's trading session.
First watch the release of the US CPI and Core CPI data sets at 12:30 GMT. The data release will be covered by the Dukascopy Research Team on the bank's live webinar platform. Tune in at 12:20 GMT to watch the data release.
However, the main event of the day will be the release of the Federal Open Markets Committee's Meeting Minutes at 18:00 GMT. The text is set to give clues in regards to future US monetary policy.
USD/JPY approaches channel line
USD/JPY has managed to maintain its sideways movement for the fourth session in a row.Despite being restricted by the 55– and 100-hour SMAs, the US Dollar breached this support and edged slightly higher on Tuesday. However, a surge did not follow, as the pair had already been pushed back to the 107.00 mark by Wednesday morning.
The rate is moving closer to the bottom boundary of a three-week channel up. Given its inability to reach the upper line of this pattern last week, it is likely that a bearish breakout occurs soon and thus sends the pair towards 106.00 during the following days.
However, technical indicators are still bullish for this session, demonstrating that a test of the weekly R1 or the 38.20% Fibo circa 107.80 and 108.00 is the most likely scenario.
Hourly Chart
On the daily chart one can observe that the main focus is still on the medium term ascending channel pattern, which is aimed in a rather sharp angle upwards.
Due to that angle and the range of the pattern, it is assumed that it only represents the first move in the borders of a new long term ascending channel pattern.
Daily chart
SWFX traders are still on the long side, as 67% of open positions remained bullish during the morning hours.
Moreover, trader set up orders remain unchanged, as 60% 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 68% long positions. In addition, Saxo bank traders are 60% bullish in regards to this pair.
Spreads (avg, pip) / Trading volume / Volatility