Daily Technical Analysis:
USD/JPY has tested SMA5 for last 5 days. JPY/USD SMAs are moving and contracting in bearish sequence as the pair has moved downward.
RSI is showing bearish strength with 41% reading. RSI is moving in downward direction below midlevel (50%).
Upper and Lower Bands have closed expansion, while Middle is moving in slight downward direction. It shows bearish volatility. Where JPY is moving below middle band.
With Lutfi Magnet Theory market is 89% bearish and adjustments are 74% bullish. Lutfi Magnet Theory and adjustments are showing mix sentiment.
Concluding all Technical Analysis, initial bias slightly bearish, where JPY may attempt yesterday’s low at 77.57 and break there may extend the bearish move to low at lower band at 77.40 and then may follow bearish biasness to attempt last week low at 77.13. However sustainable move above yesterday’s high at 77.89 may turn the biasness to upward to attempt high at weekly magnet 78.10.
The dollar traded higher against most major currencies Wednesday on deep seated Spanish bail out fears and negative QE3 comments by a Federal Reserve official. Earlier, Federal Reserve Bank of Philadelphia President Charles Plosser, a noted inflation hawk, said a decision to roll out a third round of quantitative easing to encourage investing and hiring won’t work in that households and businesses would rather pay down debts than take on new leverage.
Quantitative easing functions via pumping liquidity into the financial system in a way that pushes down interest rates across the economy to encourage borrowing, weakening the dollar as a side effect. Bullish U.S. housing data sent the dollar rising to the point of profit taking as well
Here is schedule for today’s important data:
JPY No Data: No major data is expected for the day.
US Core Durable Goods Orders at 05:30pm. US Core Durable Goods, excluding transportation declined unexpectedly in July, dropping 0.4% while predicted to gain 0.5%. This reading followed a 2.2% plunge in the previous month. Meanwhile headline figure showed a 4.1% leap after a 1.6% increase in June driven by civilian aircraft spending. Disregarding the core figure, there is an improvement in US economic activity. A 0.5% gain is anticipated this time.
US Unemployment Claims at 05:30pm. The number of Americans seeking unemployment benefits dropped less than predicted last week with 382,000 claims, down 3,000 from the preceding week. The labor market added only 96,000 jobs last month, below the 141,000 in July suggesting weak hiring. Analysts believe unemployment and sluggish growth will continue to deteriorate in the coming months. Another drop to 377,000 is expected now.
US Pending Home Sales at 07:00pm. Pending home sales reached a two year high in July jumping 2.4% to 101.7, after a 1.1% decline in June. The reading was above predictions giving further evidence to the upward trend in the housing sector. Home prices also show a consistent rise aided by the boost in sales. The number of homes for sales decreased 24% in the past year. If the current pace of sales continues, the supply of houses will exhaust in 6.4 months. A decline of 0.4% is forecasted now.
USD/JPY opened the day at 77.78 with an upward move to high at 77.89. After attempting high JPY moved downward to low 77.57. The pair closed the day at 77.72.
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