- The share of orders to acquire the Buck grew from 29 to 57%
- Bullish traders' sentiment returned to its Tuesday's level of 73%
- The 20-day SMA around 112.94 represents immediate resistance
- Support is the weekly PP at 112.11
- 65% of the survey participants expect the US Dollar to cost less than 114 yen in three months
- Upcoming events: US Final GDP, US Core PCE Price Index, US Goods Trade Balance, US Personal Spending and Income, US Pending Home Sales, Japanese Household Spending, Japanese Retail Sales
Despite mixed US fundamental data on Thursday, the Greenback managed to post gains against most major currencies, with exception against the British Pound. The Buck surged the most against the Yen and the Loonie, adding 0.46% and 0.33%, respectively. The US Dollar remained relatively unchanged against the remaining commodity currencies, namely the Kiwi, edging 0.09% higher, and the Aussie, inching up 0.06%. The EUR/USD and the USD/CHF both also remained relatively unchanged, declining 0.06% and surging 0.05%, respectively. The American Dollar experienced a significant loss of 0.25% versus the Sterling, due to a positive reading of the UK Retail Sales.
New orders for long-lasting US manufactured goods dropped in February for the third time in four months, as the sector continued to struggle with the lingering effects of a strong US Dollar and lower oil prices. Bookings for goods meant to last at least three years plunged 2.8%, following the 4.2% gain, the Commerce Department reported. Categories reflecting business investment were broadly sluggish, indicating that American companies remain cautious about spending. New orders for nondefense capital goods excluding aircraft, a proxy for business spending on equipment, dropped 1.8% in February after a 3.1% increase in January.
Meanwhile, a separate report of the Labor Department showed the number of Americans applying for unemployment benefits climbed modestly last week, while revisions for prior weeks indicated the labour market was much stronger than previously estimated. Initial claims for state unemployment benefits increased 6,000 to a seasonally adjusted 265,000 for the week ended March 19. The prior week's claims were revised to show 6,000 fewer applications received than previously reported. The four-week moving average of claims, considered a better measure of labour market trends as it irons out week-to-week volatility, nudged up 250 to 259,750 last week.
Vatsal Srivastava, director at the Blackwater Consulting, explains why the US Dollar is a advancing against the Yen this week. Even though he says that there was nothing fundamentally driving USD/JPY on Monday, one of the key drivers is the falling oil prices, which is actually boosting the Yen, in his opinion, as there is an addition cause for more QQE. Vatsal Srivastava also mentions that "it is going to be a hard economic ride ahead and there seems to be no light on the horizon for Japan as of now". "Lets hope for the best," he added.
US Annualized GDP is the only event to focus on
There is only one relevant economic data release that could have some impact on the USD/JPY pair, namely the US Annualized GDP. The Gross Domestic Product Annualized, released by the US Bureau of Economic Analysis, shows the monetary value of all the goods, services and structures produced within a country in a given period of time. GDP Annualized is a gross measure of market activity because it indicates the pace at which a country's economy is growing or decreasing. Any change in the figure, compared to the previous quarters' one, is likely to cause volatility in the US crosses.USD/JPY closes in on channel's resistance
The US Dollar was able to outperform the Japanese Yen on Thursday, with the 20-day SMA limiting the gains. The same level is acting as the closest resistance today, thus, might trigger a sell-off, erasing most of yesterday's gains. The nearest support rests at 112.11, represented by the weekly PP, but in case bulls manage to push the USD/JPY currency pair over the 20-day SMA, then the current descending channel's upper border is likely to stop the rally. Moreover, this resistance trend-line is also reinforced by the weekly R1. Meanwhile, technical indicators are now giving mixed signals, unable to confirm either scenario.Daily chart
The US Dollar has been appreciating against the Japanese Yen for more than a week now. Trade was contain within the borders of an ascending channel, but gains are likely to be limited around 113.50, as a longer-period resistance line lies on the USD/JPY's path.
Hourly chart
Bulls remain in control
Bulls also dominate the OANDA market, where 64% of open positions are long, up from 63% yesterday. The sentiment as reported by SAXO Bank remains bullish, but not as strong as on Thursday- 59% of currently open positions are long, down from 60% yesterday.
Spreads (avg, pip) / Trading volume / Volatility
More than a half expect the exchange rate to fall under 114 yen
The majority (65%) now assumes that the US Dollar is to cost less than 114.00 yen after three month time. The most popular choice implies that the Greenback is either to cost somewhere between 106.50 and 108.00 yen in three months, selected by 23% of the voters. According to the votes collected between Feb 25 and March 25, the mean forecast for June 25 is 112.00. At the same time, 13% of the surveyed believe the Greenback could fall in the 114.00-115.50 price interval after a three month period.
Keeping in mind absolute bullish sentiment last week, now Dukascopy Community members are equally divided on the nearest future development of this currency pair. The median forecast is located slightly below the 112.9 mark for Friday of this week.
A trader with the Dukascopy Community, megajorko, believes that the US Dollar could still appreciate against the Japanese Yen. "This week's Friday will be the last in this month when there will be GDP announcements. After the strong sell off of the USD a correction is expected. The yen is starting to gain some power but it is in deep overbought levels so I am expecting a good correction this week," megajorko commented.
At the same time, Likerty suggests that more bearish momentum could follow. He said that "the USD/JPY is showing intentions to test the lows before deciding whether to proceed with its overdue bullish correction towards 117 and above."