- 65% of all pending orders to acquire the US Dollar
- Bulls take up 72% of the market
- The weekly PP at 104.87 represents immediate resistance
- Support is at 103.34
- 56% of the survey participants expect the US Dollar to cost more than 109.50 yen in three months
- Upcoming events: US Jobless Claims, US Manufacturing PMI, US New Home Sales
On the second day of the Federal Reserve Governor's testimony on Wednesday, Janet Yellen stated that a number of risks for the US economy is still present, thus, the Fed is taking a cautious approach to the monetary policy and the interest rate hike this year in general. One of the mentioned risks was the remaining weakness in the labour market, with the bullish trend continuing to slow down, justifying the Fed's decision to postpone June's interest rate hike. Among other reasons mentioned, Janet Yellen said that business investment was low and the energy sector suffered from low oil prices for years. Nevertheless, the long-term expectations for the US economy remain advantageous, despite some arisen factors providing difficulties. Furthermore, the possible interest rate hike in July is now expected to be delayed by most economists, with the next probability shifting to September.
In the meantime, the US Existing Home Sales figures fell in line with expectations, having risen to the highest in nine years. Low mortgage rates caused the desired effect, with Home Sales up 1.8% to 5.53 million (annualized) in May, as reported by the national Association of Realtors. Apart from the mortgage rates, rising employment and stock prices improved consumer sentiment, but growing home prices could still bring the figures down.
Vatsal Srivastava, director at the Blackwater Consulting, explained why the US Dollar advanced against the Yen last week. He said there was nothing fundamentally driving USD/JPY on Monday, but one of the key drivers was the falling oil prices, which was actually boosting the Yen; in analyst's opinion, as there was an addition cause for more QQE. Vatsal Srivastava also mentioned 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 summed up.
US data due, but high impact unlikely
There are three main events to influence the USD/JPY pair today. First of all, the US Jobless Claims, a measure of the number of people filing first-time claims for state unemployment insurance. In other words, it provides a measure of strength in the labor market. A larger than expected number indicates weakness in this market which influences the strength and direction of the US economy. Second, the US Manufacturing PMI, which captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the manufacturing PMI is an important indicator of business conditions and the overall economic condition in the US. Finally, the US New Home Sales. It is an important measure of housing market conditions. House buyers spend money on furnishing and financing their homes so as a result the demand for goods, services and the employees is stimulated.USD/JPY remains on the back foot
Yesterday the weekly pivot point prevented the US Dollar from outperforming the Japanese Yen, but the 104.00 was not reached. The weekly PP is expected to keep the USD/JPY pair at bay, but this time the 104.00 level might fail to keep the Greenback elevated. The closest support is located at 103.34, represented by the monthly S2, while the overall bottom target lies around 102.40, formed by the broadening falling wedge's support line and the Bollinger band. Meanwhile, technical indicators in all timeframes suggest the given pair is to sustain a loss, bolstering the outlook.Daily chart
The resistance trend-line on the hourly chart gave in, but that does not mean the bullish momentum is to take over, as the 200-hour SMA remains unconquered. However, the pair is trading in an ascending channel pattern, thus, any losses are expected to be limited by 103.80.
Hourly chart
Bulls remain strong, taking up 72% of the market today, compared to 71% on Wednesday. At the same time, there are 65% of all pending orders to acquire the US Dollar today.
There is a small but nevertheless bullish bias among OANDA and Saxo Bank traders as well. In case of OANDA, 70% of positions opened by its clients are long. Similarly, 60% of positions opened by Saxo Bank traders are long as well, unchanged since Wednesday.
Spreads (avg, pip) / Trading volume / Volatility
Slightly more than a half expect the exchange rate to rise above 109.50 yen
Slightly more than half of the surveyed (56%) now assume that the US Dollar is to cost more than 109.50 yen after three month time. The most popular choice, however, implies that the Greenback is to cost between 111.00 and 112.50 yen in three months, selected by 1165% of the voters. According to the votes collected between May 23 and June 23, the mean forecast for Sep 23 is 109.33. At the same time, 15% of the surveyed believe the Greenback could cost either between 106.50 and 108.00 yen, or between 112.50 and 114.00 yen or even more than 114.00 yen in three months.
This week, in contrast, the pair is seen to appreciate as it depicted on the chart, with a number of bulls significantly outweighing bears. USD/JPY is forecasted to reach the 105.3 level by Friday, June 24.
Megajorko suggests that the US Dollar is to strengthen against the Yen by Friday 24 of June. "Although we are in a strong bearish channel, so I suppose there must be some correction this week", he explained his outlook.
Meanwhile, another trader with the Dukascopy Community, bakafx, supposes that price will be between the monthly S2 and the last two-week low.