- SWFX market sentiment is 60% bearish
- 52% of pending orders in a 100-pip range are to buy
- Significant support is located at 112.40
- Upcoming events: FOMC member Powell speaks
The ISM stated that its index for the US manufacturing activity surged to 60.8 points in September, reaching the highest level in more than 10 years.
Solid advances in ISM-reported figures to a certain extent reflected affects from Hurricanes Harvey and Irma. The report showed an increase in exports measure as producers benefited from the Dollar's weakness, which made US supplies more attractive to overseas buyers.
No significant market shakers on Tuesday
The only fundamental event of importance in this session is a speech by the Federal Reserve Governor Jerome Powell at 1230GMT. In addition, Autodata Corp is to publish Total Vehicle Sales during the day. This event, however, is unlikely to resonate in the market.
USD/JPY breaks from junior channel
In line with expectations, the Greenback continued to gain value against the Yen, breaking through the upper edge of a junior descending channel. The surge was mainly based on release of positive information on the US manufacturing activity.However, a combination of the 55- and 100-hour SMAs located near the lower support line of a dominant ascending channel additionally supported the above-mentioned soar.
Because of the hawkish Fed outlook, anticipation of Trump's tax reform and other favourable fundamental background, the pair is expected to continue to head to the north.
However, there is a need to take into account that due to 48 pips advance just in three hours the Yen might force the pair to make a temporary rebound and restore some lost positions.
Hourly chart
The trading range of USD/JPY remained between the weekly R1 and PP in the 113.37/112.42 area on Tuesday. During the morning session, the US Dollar managed to breach the upper wedge boundary; however, it is yet to be seen if this upside momentum continues and thus maintains the rate above the given line.
By and large, the Greenback has been hindering near this upper boundary for the last week, demonstrating that bulls are still able to resist any attempts to move the rate lower.
Daily chart
The bearish market sentiment has increased on Tuesday, as the number of traders holding short positions is at 60% (+6%). Meanwhile, 53% of pending orders are to buy the US Dollar.
OANDA clients are bullish on the pair, with 53% of open positions being long in this session (+3%). In addition, 51% of Saxo Bank traders are also holding long positions (unchanged from Monday).