- The number of sell orders takes up 71% of the market
- Exactly three quarters (75%) of traders are now long the USS
- The 20-day SMA around 113.00 represents immediate resistance
- Support is the weekly PP at 112.11
- 64% of the survey participants expect the US Dollar to cost less than 114 yen in three months
- Upcoming events: FOMC Member Bullard Speech, US Durable and Core Durable Goods Orders, US Jobless Claims, US Markit Services PMI, US Natural Gas Storage, Tokyo Core CPI, National Core CPI, BoJ Core CPI
The US Dollar strengthened significantly on Wednesday, boosted by hawkish FOMC member Bullard's statement, as well as strong Oil Inventories figures and New Home Sales. The largest gains were seen against the commodity currencies, namely 1.19% versus both the Aussie and the Loonie, followed by a 0.67% rally against the Kiwi. Another significant surge was detected against the British Pound, while gains of 0.33% and 0.26% were registered against the Euro and the Swiss Franc, respectively. The Buck also remained almost completely unchanged against the Japanese Yen, edging 0.01% higher.
Sales of newly built single-family homes recovered modestly in February as a rise in the West offset steep declines in other regions, suggesting the housing sector has been recovering gradually amid a limited property supply on the market. The Commerce Department reported home sales increased 2.0% to a seasonally adjusted annual rate of 512,000 units. Moreover, January's figure was revised up to 502,000 units from the previously reported 494,000 units. New single-family home sales were supported by a sturdy 38,5% advance in the West last month, which reversed January's 32.7% plunge. However, excluding the West, home sales declined 8.1%. New home sales account for about 9.2% of the housing market. The median price of a new home stood at $301,400 last month, up 2.6% from a year earlier. Other signs indicate slow gains in the housing market. Sales of existing homes, roughly 90% of all home purchases, plunged 7.1% in February from January, the National Association of Realtors reported this week, but they rose 2.2% from the prior year.
With the improving labour market boosting household formation and mortgage rates still low by historical standards, housing fundamentals remain strong. The sector is expected to continue to contribute to economic growth this year.
Vatsal Srivastava, director at the Blackwater Consulting, explains why the US Dollar is a advancing against the Yen this week. Even though he says that there was nothing fundamentally driving USD/JPY on Monday, one of the key drivers is the falling oil prices, which is actually boosting the Yen, in his opinion, as there is an addition cause for more QQE. Vatsal Srivastava also mentions that "it is going to be a hard economic ride ahead and there seems to be no light on the horizon for Japan as of now". "Lets hope for the best," he added.
US Durable and Core Durable Goods Orders
From the US the Durable and Core Durable Goods Orders are to be released. The Durable Goods Orders, released by the US Census Bureau, measures the cost of orders received by manufacturers for durable goods, which means goods planned to last for three years or more, such as motor vehicles and appliances. As those durable products often involve large investments they are sensitive to the US economic situation. The Core Durable Goods Orders, however, exclude the transport sector. Rather poor figures are forecasted in both releases, so the effect on the USD/JPY might be mild. Furthermore, early tomorrow the Tokyo Core CPI is to set the mood for the Friday's Asian session, most likely allowing the US Dollar to take the upper hand.USD/JPY takes another shot at edging higher
The USD/JPY pair was unable to sustain growth yesterday, resulting in the exchange rate remaining flat over the day. The Buck now risks making a U-turn and putting the immediate support, namely the weekly PP, to the test; with technical indicators still emitting bearish signals in all timeframes. On the other hand, strong fundamentals could not only cause the immediate resistance near 113.00 to be pierced, but even push the US Dollar towards the descending channel's resistance line around 113.55, also reinforced by the weekly R1. Similarly, a much weaker figure might trigger a sell-off towards the lower border at 119.92.Daily chart
The USD/JPY currency pair keeps stably recovering, now less than 100 pips away from the resistance line at 113.50. However, the bearish momentum is likely to return, once the resistance trend-line is retested, leading the exchange rate below 111.00, unless a bullish breakout occurs.
Hourly chart
Bulls remain in control
Bulls also dominate the OANDA market, where 63% of open positions are long, down from 64% yesterday. The sentiment as reported by SAXO Bank keeps improving - 60% of currently open positions are long, unchanged since Wednesday.
Spreads (avg, pip) / Trading volume / Volatility
More than a half expect the exchange rate to fall under 114 yen
The majority (64%) now assumes that the US Dollar is to cost less than 114.00 yen after three month time. The most popular choice implies that the Greenback is either to cost somewhere between 106.50 and 108.00 yen in three months, selected by 24% of the voters. According to the votes collected between Feb 24 and March 24, the mean forecast for June 24 is 111.94. At the same time, 13% of the surveyed believe the Greenback could fall either in the 114.00-115.50 price interval after a three month period.
Keeping in mind absolute bullish sentiment last week, now Dukascopy Community members are equally divided on the nearest future development of this currency pair. The median forecast is located slightly below the 112.9 mark for Friday of this week.
A trader with the Dukascopy Community, megajorko, believes that the US Dollar could still appreciate against the Japanese Yen. "This week's Friday will be the last in this month when there will be GDP announcements. After the strong sell off of the USD a correction is expected. The yen is starting to gain some power but it is in deep overbought levels so I am expecting a good correction this week," megajorko commented.
At the same time, Likerty suggests that more bearish momentum could follow. He said that "the USD/JPY is showing intentions to test the lows before deciding whether to proceed with its overdue bullish correction towards 117 and above."