- 57% of all pending orders are to acquire the US Dollar
- 72% of traders hold long positions
- Immediate resistance lies at 109.00
- The closest support rests around 108.54
- Upcoming events: US Empire State Manufacturing Index, US NAHB Housing Market Index, US Building Permits, US Housing Starts, US Capacity Utilization Rate, US Industrial Production
US consumer prices fell unexpectedly last month, marking the first decline in more than a year, official figures revealed on Friday. The Labour Department reported its CPI dropped 0.3% in March, following the preceding month's gain of 0.1%, while the so-called core CPI, which excludes volatile items, fell 0.1% in the reported month, following February's 0.2% increase. Meanwhile, market analysts expected the CPI and the core CPI to come in at 0.0% and 0.2%, respectively. According to the Labour Department, the decline in inflation was driven by lower gasoline and telephone services prices, which plunged 6.2% and 7.0%, accordingly. However, the price food advanced 0.3%, while the cost of medical care climbed 0.4% last month. Prices of motor vehicles and apparel declined 0.3% and 0.7%, respectively. The Labour Department reported also that retail sales fell 0.2% in March amid lower demand for automobiles, while analysts anticipated a 0.1% increase.
Moreover, the preceding month's gain of 0.1% was revised down to a -0.3%. Excluding volatile items, retail sales came in at 0.0%, below expectations for a 0.1% rise but in line with February's revised reading. Friday's data suggested that US economic growth slowed significantly during the Q1 of 2017.
Another quiet Monday
Monday is a relatively quiet day in terms of fundamental data, as it usually is. Due to Easter holidays only events from the US will be due, namely the Empire State Manufacturing Index. It gauges business conditions for the New York manufacturers. A positive result is bullish for the USD, while a negative has a negative effect on the US Dollar. The NAHB Housing Market Index is also worth paying attention to. It presents home sales and expected home buildings in the future indicating housing market trend in the US. The growth rate of the housing market affects the USD volatility.USD/JPY sets eye on 108.00
The US Dollar weakened against the Japanese Yen again on Friday, amid soft US fundamentals weighing on the Greenback. As a result, the pair failed to rebound from the descending channel's support line, breaching the tough demand area around 108.90, which resulted in more weakness earlier today. The Buck is now expected to approach the 108.00 level, where support could be sufficient for the bullish momentum to be regained. A failure to recover this weak might lead to a slump towards July-September 2016 lows, namely closer to the 100.00 handle. However, longer-term technical studies point to a potential recovery by April's end.Daily chart
The USD/JPY currency pair has been trading in a descending channel pattern since last Monday, consequently retesting the resistance trend-line, which suggests an upside breach is soon likely to occur. However, with larger scale channel's support line getting pierced, it could become difficult for the Buck to find sufficient support for this scenario to play out.
Hourly chart
There are 72% of traders holding long positions today, whereas 57% of all pending orders are to acquire the US Dollar.
Right now 61% of OANDA clients are bulls, unchanged since Friday, the bullish sentiment has been holding around the same level for some time now. In the meantime, Saxo Bank clients retain a positive outlook towards the US Dollar, with their sentiment being close to ours, being that 67% of their open positions are now long and the remaining 33% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between March 17 and April 17, traders expect the US Dollar to appreciate to 112.29 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 64% of all forecasts fall under 114 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 108.00 and 109.50 yen in three months, with 15% of the survey participants choosing this trading range. At the same time, the second most popular interval were the 112.50-114.00 and the 115.50-117.00 ones, both with 13% of survey participants choosing each of them.