Economic Reports from the United States Will Determine the Sentiment on Currency Majors in the Short Term

Volatility and trading activity in financial markets is still high. The dollar index (#DX) has moved away from monthly highs. The US Inflation Report has reinforced investors' expectations that the Fed may slow down the rate of increase in interest rates shortly. In November, the US consumer price index remained unchanged. Experts predicted a growth rate of 0.1%. It should be recalled that the Fed's meeting will take place on December 19. Currently, more than 75% of financial market participants believe that the Central Bank will increase the range of key interest rates by 25 basis points to 2.25% -2.50%. The uncertainty on the trade issue between the US and China, as well as the inversion of the curve of the government bonds yield put additional pressure on the US dollar.

finviz 2018
Source: finviz.com

On Friday, December 14, a report on US retail sales will be published. The core retail sales index is an important indicator of consumer spendings, as well as the pace of development of the American economy. Experts expect that in November the figure will slow down from 0.7% to 0.2%.

US retail sales
Source: tradingeconomics.com

These statistics can have a significant impact on the dynamics of major currency pairs in the short term. We recommend you to pay attention to the difference between the actual and forecasted values of the indicators.

Let's consider the current technical pattern on the USD/JPY currency pair
  • Support levels: 113.150, 112.700, 112.300
  • Resistance levels: 113.600, 114.000
USD/JPY pattern

An ambiguous technical pattern is observed on the USD/JPY currency pair. The trading instrument is in a sideways trend. Currently, the key support and resistance levels are: 113.150 and 113.600, respectively. The USD/JPY quotes are tending to grow. Indicators point to buyers power:
- The price has fixed above 50 MA and 200 MA;
- The MACD histogram is in the positive zone and above the signal line.

Nevertheless, we recommend opening positions from the key levels.

If the price fixes above the resistance level of 113.600, we expect further growth of the USD/JPY currency pair. The immediate goal for profit taking is the local supply zone of 114.000-114.200.

Alternative option. If the price fixes below 113.150, you need to consider selling USD/JPY. The movement is tending to 112.700-112.300.

Confirmations and entry points to the market should be looked for on lower timeframes. When tracking positions, we recommend using a trailing stop.

by JustMarkets, 2018.12.14

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

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