- 53% of pending orders are to sell the US Dollar
- 67% of all open positions are short
- The nearest significant resistance is around 113.41
- Downside potential down to 112.64
- Upcoming Events: US PPI m/m, US Unemployment Claims, Fed Chair Yellen Testifies, FOMC Members Evans and Brainard Speak
On Wednesday, the Chair of the US Federal Reserve Janet Yellen testified on the Semi-annual Monetary Policy Report before the House Financial Services Committee in Washington DC. In the prepared testimony, Yellen said that the country's economy was strong enough for the central bank to continue to increase interest rates and start winding down its massive balance sheet as soon as this year.
Furthermore, in what might appear to be her last public appearance before the Congress, the Fed Chair highlighted the fact that despite the economy expanding at a slowly (but steady) pace, it continued to add jobs and benefit from stable household consumption and business investment, while more favourable conditions overseas continued to support the domestic economy. Ms. Yellen also noted that in the wake of the current estimates, the federal funds rate might not even need to increase all that much further in order to reach the neutral level that would neither encourage nor discourage the economic activity at home.
Busy day for USD traders
Mid-session will be busy in terms of fundamentals from the United States, namely, it is to release monthly PPI, Core PPI and unemployment claims at 1230GMT. In addition, Fed Chair Yellen is to testify on the Semiannual Monetary Policy Report at 1400GMT.
USD/JPY pressured by bears
The US Dollar was trading slightly above a support cluster formed by the weekly PP and the 200-hour SMA at 113.40 on Wednesday morning. Nevertheless, fundamentals put strong downward pressure on the pair mid-session that resulted in the Greenback plunging as low as 113.00. The rate has not since recovered, despite various attempts to edge above the 113.30 mark. Thus, the Greenback has remained below the weekly PP since the massive fall and may fail to overcome it once again. It is therefore likely that the rate persists within the bounds of this level and the weekly S1 at 112.64 in case no solid upside risks manage to prevail in this session.Hourly chart
The US Dollar closed below the weekly PP on Wednesday, falling down to the 113.20 mark. Thus, it is being stranded by the weekly PP and S1 at 113.41 and 112.64, accordingly. The base scenario favours the rate staying in this range, as neither bulls nor bears have managed to take the upper hand.
Daily chart
The bearish market sentiment prevails in this session, as 67% of all open positions are short, compared to 68% on Wednesday. In addition, 53% of pending orders are to sell the US Dollar.
OANDA clients have turned bearish on the US Dollar, with 57% of traders holding short positions. Meanwhile, Saxo Bank clients have turned mildly bullish, as the number of long and short positions is now equal.
Spreads (avg, pip) / Trading volume / Volatility
Traders bullish on US Dollar
Traders expect the Greenback to appreciate up to the 113.78 mark against the Japanese Yen in three months' time (113.67 on Wednesday). Currently, 65% of all forecasts are strongly bullish, being located above the current spot price. Nevertheless, the majority of voters still expect the US Dollar to cost somewhere between 114.00 and 115.50 yen mid-October, with 29% of survey participants choosing this trading range (+1%).