- SWFX market sentiment is 64% bullish
- 52% of pending orders in a 100-pip range to buy
- Gains could be capped near 109.50
- Upcoming Events: US Goods Trade Balance, US Preliminary Wholesale Inventories m/m, Japan's Household Spending y/y, Japan's Unemployment Rate, BOJ Core CPI y/y
The American Dollar continued to advance against the Yen as it was expected yesterday. The reason behind this new direction was mostly associated with anticipation of the Fed Chair Janet Yellen speech that most probably will significantly affect the value of Dollar, at least in the short run.
The report showing an unexpected drop in the US new home sales in July boosted an initial fall in the USD/JPY. The Yen strengthened against the US dollar by 0.08% to reach the 109.39 mark, albeit the pair returned to testing pre-data levels in the Thursday's morning session. The Commerce Department revealed that new home sales in the US fell 9.4% to a seasonally adjusted amount of 571K units in July, which was the strongest decline since December 2016. Weak figures raised concerns over the future recovery and healthy growth of the country's property market. Data would be closely watched to evaluate whether enhanced supply conditions would help reinforce sales conditions in the next couple of months.
Calm trading day for USD/JPY traders
This trading session should be rather calm even despite some fundamental releases. The US is to publish monthly Goods Trade Balance and preliminary Wholesale Inventories at 1230GMT. Meanwhile, Japan will release monthly Household Spending and Unemployment Rate at 2330GMT and BOJ Core CPI tomorrow morning at 0500GMT. These events, however, are unlikely to affect the market in any way.
USD/JPY finds resistance at 55– and 100-hour SMAs
The US Dollar was heading towards the 109.08 mark against the Yen prior to being pushed down by sluggish US Durable Goods Orders. The given move resulted in the rate dashing through the 200-, 55– and 100-hour SMAs down to 109.10. Subsequently, the rate has remained in a relatively stable level between the weekly PP and the monthly S1 in 109.28/108.82. It is likely that the Greenback tries to appreciate once again towards the 200-hour SMA—a level that should be today's upside limit. On the other hand, the aforementioned monthly S1 together with the weekly S1 circa 108.80 is expected to limit losses for Dollar bulls.Hourly chart
As apparent on the daily chart, the Greenback has remained relatively stable against the Yen within the last week. Today's candle opened in the same range, demonstrating that no drastic moves are likely to occur in this session. Therefore, gains and losses should be limited to the 109.00/109.40 area.
Daily chart
SWFX market sentiment is bullish on Monday, as 64% of traders are holding open positions (-1%). Furthermore, 55% of pending orders are to buy the US Dollar (-1%).
OANDA clients are likewise bullish on the pair, with 64% of its clients having long positions (-3%). Similar viewpoint is held by Saxo Bank clients with 64% long positions (unchanged from Friday).