- SWFX market sentiment is 70% bullish (-1%)
- 58% of pending orders in the 100-pip range are set to BUY
- Unexpected fundamental event
- Upcoming events: US CPI and Core Retail Sales
The USD/JPY currency exchange rate has been affected by a non-scheduled event. Namely, the Japanese regulators have announced that they will push for a law to decrease FX retail leverage from 1:25 to 1:10. This is 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
There are no notable events set to occur during today's trading session, which might affect the USD/JPY currency exchange rate. Instead traders are looking at the information in regards to the upcoming new FX retail trading regulation in Japan.
However, look forwards for Wednesday. 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.
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 early on Tuesday
The US Dollar remained steady against the Japanese Yen on Monday, as it was trading in a narrow 108.70/50 range.This lack of direction changed rapidly during the Asian session when the Greenback plunged 85 pips within a couple of hours down to the weekly S1 near 108.00. In case this massive fall continues, losses should be limited by the monthly S1 located at 107.20.
This strongly bearish sentiment during the first part of the day has sent technical indicators in the oversold area. Thus, it is likely that bulls use this opportunity to re-gain some of their lost positions. This expected advance should be limited by the 55– and 100-hour moving averages and the weekly PP circa 109.00.
Hourly Chart
As apparent on the chart, the rate is still trading in a narrow five-week descending channel. Given the current positioning of the pair, traders might see a soon breakout to the upside that could be followed by a short-term surge within this week.
Meanwhile, various technical indicators support this scenario.
Daily chart
SWFX traders are on the long side, as 70% of open positions were bullish during the morning hours (-1%). In addition, 66% of pending orders are to buy the Greenback.
The market sentiment of OANDA traders remains strongly bullish with 72% long positions (+4%). Saxo Bank clients are likewise bullish, as 56% of open positions are long (-6%).
Spreads (avg, pip) / Trading volume / Volatility