- 52% of pending orders are to sell the US Dollar
- 69% of all open positions are short
- The nearest resistance is located near 112.70
- Downside potential down to 111.70
- Upcoming Events: US Import Prices m/m, US NAHB Housing Market Index, US TIC Long-Term Purchases
Consumer prices in the United States were flat, while retail sales dropped for the second consecutive month in June. The Labour Department reported on Friday that its CPI registered an unchanged reading in the observed month, missing market expectations for a 0.1% rise, as the cost of mobile services and gasoline declining. On a yearly basis, the index surged 1.6% in June, continuing to ease from February's 2.7%, when it showed the strongest gain in five years. Furthermore, the so-called core inflation rose by the same margin of 0.1% for the third straight month.
Meanwhile, the country's retail sales registered a 0.2% drop in the reported month, affected by declines in receipts at supermarkets, clothing stores and service stations. Data showed the largest monthly fall of 1.3% in gas station sales. Overall, economists suggested that the weaker-than-expected reports are set to diminish expectations for the Fed to raise interest rates for the third time this year, with inflation being the main uncertainty factor to define the course of further monetary policy changes.
Minor data from US
This trading session comes with three data sets from the Unites States with medium or minor importance, namely, monthly prices on imported goods and services at 1230GMT, the NAHB Housing Market Index at 1400GMT and Treasury International Capital's long-term purchases at 2000GMT.
USD/JPY stranded in channel
On Monday, the US Dollar remained in a relatively constant range, even despite the massive leap mid-session. This situation changed this morning when the American currency fell down to the 112.10 mark. This momentum downwards could continue in the upcoming hours and therefore move the rate closer to the weekly S1 at 111.70. The given support, however, is very strong, reinforced by the 55-, 100– and 200-day SMAs apparent on the daily chart. Only substantial bearish sentiment may dash through this area. Thus, it is more likely that a reversal to the upside could occur there. In the meantime, another scenario may set the pair for a reversal near 112.00, thus establishing the upper channel boundary in the 112.20/50 territory as a possible trading range until Wednesday morning.Hourly chart
USD/JPY remains stranded between the weekly PP at 113.10 and the 55-, 100- and 200-hour SMAs circa 111.90. The downside momentum has prevailed in this session; however, it is unlikely that the US Dollar breaches the aforementioned support, as it already failed to do so during the morning session.
Daily chart
The bearish market sentiment prevails in this session, as 69% of all open positions are short, compared to 70% on Monday. In addition, 52% of pending orders are to sell the US Dollar.
OANDA clients remain bearish on the US Dollar, with 56% of traders holding short positions. Meanwhile, Saxo Bank clients have turned slightly bullish, as the number of long positions in this session is 51%.
Spreads (avg, pip) / Trading volume / Volatility
Traders bullish on US Dollar
Traders expect the Greenback to depreciate down to the 111.52 mark against the Japanese Yen in three months' time (unchanged since Monday), thus demonstrating that bears have taken the upper hand. Currently, 54% of all forecasts are bearish, being located below the current spot price. Meanwhile, 23% of voters expect the US Dollar to cost somewhere between 114.00/115.50 or below 106.50 yen mid-October, with 23% of survey participants choosing these trading ranges.