- The share of buy rose to 56%
- 70% of traders hold long positions
- Immediate resistance lies at 111.23
- The closest support rests at 110.27
- Upcoming events: US Trade Balance and US Factory Orders
US manufacturing activity rose in line with analysts' expectations last month, a private survey revealed on Monday. The Institute for Supply Management reported its Purchasing Managers' Index for the manufacturing sector came in at 57.2 in March, down from the preceding month's 57.7. However, the figure met market forecasts. Out of the 18 industries, 17 reported growth last month. Data also showed that the sharp oil price rebound contributed most to the manufacturing sector recovery over the past several months. Nevertheless, some manufacturing companies projected activity growth to remain flat in the upcoming months. The New Orders Index came in at 64.5 points, following the February reading of 65.1.
However, the gauge if new orders remained at its three-year highs, suggesting that the sector would remain on a solid growth track. Manufacturers also pointed to rising raw material prices, providing further evidence that inflationary pressures continued to build in the US economy. Meanwhile, Markit reported that the group's PMI for the US manufacturing sector dropped to 53.3 last month, the lowest in six months, compared to the prior month's 53.4, whereas analysts anticipated a slight rise to 53.5 points. Furthermore, Markit said that the New Orders Index came in at its slowest pace since October.
US Trade Balance and US Factory Orders
Today two fundamental data releases are due from the US side, namely the Trade Balance and the Factory Orders. The Trade Balance is a balance between exports and imports of total goods and services. A positive value shows trade surplus, while a negative value shows trade deficit. It is an event that generates some volatility for the USD. If a steady demand in exchange for US exports is seen, that would turn into a positive growth in the trade balance and should be positive for the USD. As for the Factory Orders, it is a measure of the total orders of durable and non-durable goods, such as shipments, inventories and orders at the manufacturing level, which can offer insight into inflation and growth in the manufacturing sector.USD/JPY keeps sliding down
Monday ended with the US Dollar edging lower against the Japanese Yen, paving its way towards the descending channel's lower border, rather than the upper. Technical studies keep giving bearish signals, implying the Buck is to keep weakening. The weekly S1 is the nearest support, but in case bears continue pushing the pair lower, a drop beyond this area is likely. Nevertheless, a tough support cluster rests circa 109.30, which is also reinforced by the channel's support line, thus, that is where the Greenback should definitely rebound, given that no other factor sparks more USD-selling.Daily chart
The USD/JPY pair began declining since Friday, trading in what appears to be a broadening falling wedge pattern. Since falling wedges tend to breakout to the upside, this confirms the situation on the daily chart, as a rebound could occur near the 109.50 mark, which would coincide with the pair bouncing back from the channel's support line on the daily chart.
Hourly chart
Market sentiment remains bullish, as 70% of traders hold long positions today, compared to 69% yesterday. At the same time, the share of buy orders added two percentage points, having risen up to 56%.
Right now 61% of OANDA clients are bulls, compared to 63% on Monday, the bullish sentiment has been growing weaker since Friday In the meantime, Saxo Bank clients retain a positive outlook towards the US Dollar, being that 66% of their open positions are now long and the remaining 34% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between March 04 and April 04, traders expect the US Dollar to appreciate to 114.50 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 57% 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 117.00 and 118.50 yen in three months, with 14% of the survey participants choosing this trading range. At the same time, the second most popular intervals were the 112.50-114.00, the 115.50-117.00, the 118.50-120.00 and the 120.00-121.50 ones, with 12% of survey participants choosing each of them.