- SWFX market sentiment is 63% bullish
- 64% of pending orders in a 100-pip range to buy
- Gains could be capped near 111.13
- Upcoming Events: US Unemployment claims, US Core PCE Price Index m/m, US Personal Spending m/m, Chicago PMI, US Pending Home Sales m/m, Japan's Capital Spending q/y, Japan's Final Manufacturing PMI, Japan's Consumer Confidence
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.
US Unemployment Claims
The first data release in this session is the weekly US Unemployment Claims, US Core PCE Price Index and US Personal Spending at 1230GMT. In addition, Chicago Business Barometer is to be published at 1345GMT and US monthly Pending Home Sales – at 1400GMT. Meanwhile, Japan is to release quarterly Capital Spending at 2350GMT, as well as Final Manufacturing PMI and Consumer Confidence tomorrow morning at 00:30GMT and 0500GMT, respectively.
USD/JPY breaks from ascending channel
Fortunately for the buck, both data releases were even better that analysts anticipated. Even though they did not arouse especially high interest, but it was still enough to push the currency pair out of the channel. The surge gradually continued until the pair faced the first resistance level set up by the weekly R2 at 110.49. Contrary to the previous three days, today the Dollar will not have any additional stimulus from the fundamental side. Accordingly, the pair is likely to retreat back to the weekly R1 at 109.92. Yet, the sharp fall is not expected, as the southern side is reliably secured by the 55-, 100- and 200-hour SMAs. However an opposite scenario is likely to happen as well, an aggregate of technical indicators sends a strong buy signal for the 5H and 1D timeframes.Hourly chart
USD/JPY continues to increase gains for the fourth consecutive session. The strong appreciation on Wednesday moved the pair between the weekly R1 and R2 in the 109.93/110.49 area. It is likely that the pair manages to surpass the latter once more; however, the bullish sentiment may allay, thus leaving the rate in the abovementioned range.
Daily chart
SWFX market sentiment remains bullish in this session, as 63% of traders are holding open positions (-6%). Furthermore, 52% of pending orders are to buy the US Dollar.
OANDA clients are likewise bullish on the pair, with 67% of its clients having long positions (+3%). Similar viewpoint is held by Saxo Bank clients with 63% long positions (+2%).