- SWFX market sentiment is 63% bullish
- Pending orders in the 100-pip range are 53% to SELL
- US Retail Sales and PPI
Tuesday saw a large increase of volatility in the USD/JPY currency exchange rate. First the rate jumped to reach a new high level before a fundamental event beat it down. The decline began when the US President fired the Secretary of State Tillerson. That caused a decline of the Buck against the rest of the currency markets.
The Bureau of Labour Statistics revealed on Tuesday that February consumer price index hit the forecasts, rising at a 0.2% pace, following the 0.5% move up recorded in the previous month.
The US Labour Department raised concerns that inflation is likely to accelerate, and, as a result, the Fed could hike interest rates faster than anticipated. Investors are carefully watching the situation in the market and looking for clues on how quickly the rates could be raised.
Time for Retail Sales and the PPI
The week of US macroeconomic data releases continues. Today we are expecting the release of the US Retail Sales and the PPI data sets. The data will be out at 12:30 GMT, and it will be covered by the Dukascopy research team on the bank's webinar platform.
In addition, the rest of the week will also have notable data releases that the Dukascopy research team will cover on the bank's webinar platform. In general, each day at 12:30 GMT there will be a data release.
USD/JPY returns to 106.40
Despite showing high volatility on Tuesday, USD/JPY had returned near the 106.40 mark by Wednesday morning. The first part of the session was allocated to bulls who pushed the rate 91 pips higher to the 107.20 area.The US inflation report drove the market in the opposite direction, thus allowing for fall down to the weekly PP at 106.40. Given that the Greenback moved below the 55– and 100-hour SMAs, this bearish movement might continue in this session, as well.
The nearest support of significance is the 200-hour SMA at 106.20, while the 105.80 area is restricted by the weekly S1.
The pair should eventually edge higher towards the weekly R1 and the monthly PP near 107.50, as no other resistance levels that could limit further advances are located in between.
Hourly Chart
There have been new developments in regards to the massive scale channel down pattern. Namely, after looking closely at the way the reference points for the most dominant channel they were adjusted to the exact high levels of the hourly candles. Meanwhile, the reference for the lower trend line was experimented with.
As a result of the experiment, it was discovered that the lower trend line of the most dominant channel has been reached. This indicates that the initial decline of the US Dollar against the Yen in the first months of 2018 has ended.
The above discovery was made on Thursday. Since then the upper trend line of the named channel down pattern has been pierced.
In regards to the future, we are still expecting the reveal of a new long term pattern.
Daily chart
SWFX traders are still on the long side, as 63% of open positions were bullish during the morning hours. However, trader set up orders remain bullish, as 54% of trader set up orders were to buy the US Dollar in favour to the Japanese Yen.
Meanwhile, the market sentiment of OANDA traders remains strongly bullish with 70% long positions. In addition, Saxo bank traders are 58% bullish in regards to this pair.
Spreads (avg, pip) / Trading volume / Volatility