- SWFX market sentiment is 74% bullish (+9%)
- Pending orders in the 100-pip range are 60% to BUY
- The usual employment release and FOMC
A fundamental change has taken place, which has caused the USD/JPY to change its direction. The change was caused by the release of the Federal Open Markets Committee Meeting Minutes, which shed light on what the future monetary policy of the US Dollar will be.
The Greenback weakened versus the Euro following the release of US existing home sales report. The EUR/USD pair increased 11 base points, or 0.09%, to hit the 1.2334 level, reflecting the decline in the resales of American homes.
The US National Association of Realtors reported that in January the existing home sales slumped for the second month in a row. Contrary to economists' expectations for the number to have surged 0.9%, existing home sales declined 3.2% in the reported month.
It was the largest drop on year-to-year basis over the three-year period. Yet, the demand for housing is increasing due to the boosting labor market, which results as a shortage of buying opportunities for some potential first-time buyers.
Events that might surprise
By looking at what is left for this week in regards to data releases that might cause fluctuations, two events can be noticed. However, both of them could cause a reaction only if they significantly differ from the forecasts.
Namely, on Thursday watch out for the US Unemployment Claims at 13:30 GMT. On Friday watch the various FOMC member speeches, which are set to occur in the second part of the day. To be exact at 15:15 GMT Dudley speaks, at 18:30 GMT Mester gives a speech, and at 20:40 GMT Williams will express his views.
USD/JPY supported by 200-hour SMA
Despite several attempts to edge lower on Wednesday, the movement of the US Dollar was guided by the 200-hour SMA. As apparent on the chart, the pair has still not reached the upper boundary of a two-month channel down. This is expected to occur today.A possible test of this line is also supported by the fact that the nearest southern barrier is provided by the 200– and 55-hour SMAs and the monthly S1 which are restricting the pair's movement below the 107.20 mark. This might put upward pressure on the rate just to allow for a test of the senior channel.
Technical indicators are in favour of subsequent bearish pressure that should dominate the market today. Thus, the test of 108.00 could be followed by a decline in price. This, in turn, might mark the beginning of a new wave down during next week.
Hourly Chart
The US Dollar continues to trade in a narrow channel against the Yen in force since late December, 2017. The pair fell to its lower boundary last week and has since shown some signs of recovery.
In the recent trading sessions the surge has slowed down. The slow down and a short lived decline has occurred without touching the upper trend line of the downwards aimed channel. Although, it can be expected that the various support levels, which are located around the 107.00 mark, will force a rebound that results in another confirmation of the upper trend line of the described pattern.
Daily chart
SWFX traders are on the long side, as 74% of open positions were bullish during the morning hours. In addition, 60% (-1%) of pending orders are to buy the Greenback.
Meanwhile, the market sentiment of OANDA traders remains strongly bullish with 64% long positions. In addition, the Saxo Bank's published market sentiment is 56% long
Spreads (avg, pip) / Trading volume / Volatility