- 68% (yesterday 69%) of all commands in the 100-pips range around the spot are to purchase the Buck
- Share of bulls unchanged at 59%
- 29% of traders see USD/JPY above 124.5 by June
- Nearest significant resistance is represented by the monthly R1 at 121.07, while closest support is the trend-line and weekly S1 around 120.67
- Upcoming events: US FOMC Members Lockhart and Evans Speeches, Existing Home Sales, FOMC Member Williams Speech
For a second consecutive week less than 300,000 people are applying for unemployment benefits in the United States. According to Department for Labour data, in total 291,000 Americans filed for jobless insurance for the week ended March 13. The indicator was released slightly better than predicted at 295,000 but marginally worse than during the preceding one-week period. Alongside, last week was the one when US government is surveying employers on payrolls, meaning that the world's largest economy may register a further strong increase in employment for the previous and current months. Jobless claims are considered to be one of the most important indicators of labour market's health, which is a benchmark for the Federal Reserve to determine its monetary policy stance. Earlier on Wednesday, the Fed announced a slower than previously estimated pace of rate's hike, but the first increase may take place as soon as June.
In the meantime, US current account deficit retreated substantially in the fourth quarter of the year 2014, mainly due to decrease in companies' investment earnings from their foreign branches. The negative gap surged 14.7% to reach $113.5 billion during three months ended December 31. It implies the largest deficit in more than two years, and is significantly higher than $98.9 billion registered in July-September quarter of the previous year.
Simon Smith, head of research FxPro, is sceptical with respect to the ability of the BoJ to boost growth and inflation. According to Simon, "the effectiveness of it [QE] diminishes the more you do, it was seen with the Fed as well," and "the problems it is going to cause can often outweigh what it resolves." This leads to a conclusion that "the onus is still lying very much with the government; for them to push through on what they promised to do."FOMC Member Speeches
Neither today, nor on Monday will there be any data releases on the Japanese economy, whereas potential market-movers are the two FOMC member speeches that are scheduled at 14:20 and 15:30 GMT, respectively.
USD/JPY crawling out of the pit
The US Dollar overperformed the Yen yesterday, as initial resistance failed to stop the currency from advancing. USD/JPY tested the next resistance level around 121.07, before ending the trading session at 120.77. Through Friday the Greenback is expected to extend the gains, as it opened just over a strong support cluster, and the technical indicators are giving bullish signals. However, the rally may be challenged by the bears (sellers) at the monthly R1.
Daily chart
Even though USD/JPY dropped below 120, the US Dollar managed to regain momentum yesterday and rise above this level once more. However, the up-trend resistance line is may interfere with the pair advancing further for the second day.
Hourly chart
Bullish sentiment unchanged
SWFX market sentiment remains unchanged at 59%. The portion of pending orders, however, slightly fell back, as 68% (yesterday 69%) of all commands in the 100-pips range around the spot are to purchase the Buck.
OANDA traders' sentiment deteriorated, as 55% of positions are now long. The SAXO Group market participants have a more positive outlook towards the Greenback, as bulls now account for 60% of the market.
Spreads (avg, pip) / Trading volume / Volatility
29% of traders see USD/JPY above 124.5 by mid-May
Dukascopy Community members assume the USD/JPY currency pair is going to slump further, as more than 61% of all votes are still bearish. As predicted by the traders, USD/JPY may close around 120.1 level this Friday.
Geula4x, a member of the community, has a positive outlook towards the Buck. For him the USD/JPY pair seems quite bullish on the daily chart, and he mentioned that "the price broke above 120.48 area, which has been a previous resistance area and moved significantly higher towards 121.28 area." At the same time, Likerty, another survey participant, thinks that the US Dollar will trip against the Yen. He suggests that the Yen has no room for bullish oscillations and "a major mid-term bear correction is coming, with the 109 area in mind."