US Dollar, Japanese Yen Showing Bullish Potential Ahead of US Durable Goods Orders Re

The US dollar and Japanese yen ended Wednesday mostly higher against the majors, though the British pound was by far the strongest, as risk aversion weighed on some FX carry trades. US equities took a hit as the DJIA ended up losing 2.05 percent and closed at 8300.02, while the SPX lost 1.9 percent and closed at 893.06. When looking to daily charts of these indexes, it looks like there is some bearish potential as both the DJIA and SPX have established a set of lower highs, while clear support looms below at 8,250 and 880, respectively. Indeed, a break below those noted support levels would signal further losses, and may also suggest that safe-havens like the US dollar and Japanese yen are in for gains. Another sign of bullish potential for the US dollar: the DXY index bounce from key support at 80 and subsequent rise in daily RSI from oversold levels.

In economic news, US housing market reports suggested that the contraction of the sector may be bottoming out. The Federal Housing Finance Agency said that their purchase-only house price index fell 0.55 percent in Q1, the slowest decline since Q3 2007, which helped lead the year-over-year change up to -7.14 percent from -8.31 percent. Also, the National Association of Realtors (NAR) said that existing home sales rose by 2.9 percent to 4.680 million in April as median prices rose for the third straight month to $170,200 from $169,900. That said, prices are still down 15.4 percent from a year ago and supply levels have actually increased to a five-month high of 10.2 months from 9.6 months.