Trade of the Day: USD/JPY 29th July 2014

US Pending Home Sales

Earlier yesterday, at GMT 2:00 p.m., the National Association of Realtors in the United States released the month over month Pending Home Sales figure. This data is considered as a vital fundamental indicator, as it measures the changes in homes under contracts on a month by month basis in the US economy. These contracts are already finalized, but usually waiting for the closing of the transactions. Economists and market analysts consider it as a leading economic indicator of the future value of the US Dollar against other major currencies.

The Pending Home Sales figure came down by -1.1% against an estimate of -0.2%. Since the pending sales of homes in the previous month increased by 6.0%, this month’s forecast was already being considered as bad news for the US home construction sector.

Worse than expected pending home sales data pushed the USD/JPY up 15 points since the opening of the day. As a result, by yesterday afternoon, the USD/JPY was trading at 101.90.

Japanese Household Spending

During the last hour of yesterday, the Japanese Statistics Bureau released the year over year Household Spending figure, which measures the inflation adjusted value of all expenses by the Japanese consumers. Economists consider the household consumer spending to be a leading indicator of a country’s economic health. This is because the amounts spent by consumers have a ripple effect on the overall economic activity in the country.

This month, the year over year Household Spending figure came out at -3.0% against an estimate of -3.7%. Compared to last month’s -8.0% decline, it was some good news for the Japanese economy.

When the Japanese Household Spending figure was released at GMT 11:30 p.m., the USD/JPY was trading at 101.83, around 7 points below the day’s high.

Trade Recommendation for the USD/JPY

USD-JPY analysis 29th july
Worse than expected US Pending Home Sales and better than expected Japanese Household Spending data have clearly set the USD/JPY to fall further. Since the overall market sentiment and fundamental outlook for the USD/JPY is indicating a further decline, it suggests a potential PUT in the USD/JPY.

From a technical point of view, the USD/JPY appears to trading in a tight range between 101.75 and 101.90 since July 25. Moreover, the pair has formed a triangle pattern on the hourly time frame.  Under the circumstances, it is strongly recommended that traders wait for the pair to break the triangle first, then the horizontal support around the 101.75 level, before entering any PUT position.

Recommended Broker: Banc de Binary

About Analyst:  Asif Imtiaz

Asif Imtiaz

Financial Analyst


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