- The share of buy orders remains unchanged at 56%
- 59% of traders hold long positions
- Immediate resistance lies around 114.60
- The closest support rests around 113.30
- Upcoming events: US Markit and ISM Manufacturing PMIs, Fed Chair Yellen's Speech
Economic activity in the US services sector rose unexpectedly last month, official figures showed on Friday. The Institute for Supply Management reported its Purchasing Managers' Index for the services sector climbed to 57.6 in February, while market analysts expected the Index remain unchanged from the prior month's reading of 56.5 during the reported period. Any reading above the 50-point level indicates activity expansion in the services sector. Furthermore, the Non-Manufacturing Business Activity Index came in at 63.6, the highest level since February 2011, up from the previous month's 60.3. Data also showed the New Orders Index increased to 61.2, the highest since August 2015, following January's 58.6. The ISM said 16 out of 18 industries reported growth last month, adding that the share of companies expressing a positive outlook for the future rose markedly last month despite the existing uncertainty in the US economy. Economic activity contracted in the information industry and the real estate, rental and leasing industry in February.
After the release, the US Dollar hit its intraday high of 114.54 against the Japanese Yen but failed to maintain its gains as investors awaited a speech by the Fed Chair Janet Yellen in the day.
US Factory Orders is the only event
There is only one relevant event today that could have some impact on the USD/JPY pair's performance, namely the US Factory Orders. They are a measure of the total orders of durable and non-durable goods, such as the shipments (sales), inventories and orders at the manufacturing level which can offer insight into inflation and growth in the manufacturing sector.USD/JPY dives on risk-aversion
With the return of the risk-off sentiment, the US Dollar weakened against the Japanese Yen on Friday, managing to retain its position above the 114.00 handle. However, risk-aversion remains in the markets, thus, another leg down is anticipated. The nearest support rests circa 113.30, formed by the 20-day SMA, the weekly and the monthly PPs, which is to prevent the USD/JPY pair from edging lower today. Meanwhile, the pair appears to have formed a moderate ascending channel pattern, the upper border of which, along with the monthly R1, the 55-day SMA and the Bollinger band, represent immediate resistance circa 114.50.Daily chart
Same as two weeks ago, the USD/JPY pair topped out near 114.80, unable to breach the 115.00 handle – the area that kept the pair at bay for quite some time now. The 220-hour SMA is expected to provide support for now and provide sufficient impetus to help hold on above 114.00.
Hourly chart
There are 59% of traders holding long positions today (previously 60%), whereas the share of buy orders remains unchanged at 56%.
Right now 64% of OANDA clients are bulls, compared to 54% on Friday. In the meantime, Saxo Bank clients retain a positive outlook towards the US Dollar, being that 58% of their open positions are now long and the remaining 42% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between February 06 and March 06, traders expect the US Dollar to appreciate to 114.20 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 58% of all forecasts fall above 114 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 114.00 and 115.50 yen in three months, with 18% of the survey participants choosing this trading range. At the same time, the second most popular interval was the 106.50-108.00, with 15% of survey participants choosing it.