- The share of buy orders remains unchanged at 55%
- 62% of all open positions are long
- Immediate resistance lies around 114.50
- The closest support rests around 113.30
- Upcoming events: US Initial Jobless Claims
US manufacturing activity rose at a stronger-than-expected pace in February, official figures showed on Wednesday. The Institute for Supply Management reported its Purchasing Managers' Index for the manufacturing sector advanced to 57.7 points last month, the highest level since December 2014, following the previous month's 56.0 points. Meanwhile, analysts anticipated a mild increase to 56.2. Wednesday's survey suggested that the US economy expanded for 93rd straight month. Data also showed the New Orders Index climbed to 65.1 last month from 60.4 in January. However, the Employment Index fell to 54.2 in February from the prior month's 56.1, surpassing analysts' expectations for a decline to 55.9. Furthermore, the ISM survey showed the Prices Paid Index dropped to 68.0 points last month, meeting forecasts and following the preceding month's 69.0.
Although the reading above 50 point level still indicated higher raw materials prices. The figures indicated strong growth of sales and demand, and painted a positive outlook for the manufacturing sector over the upcoming months. After the release, the EUR/USD pair rose from 1.0529 to 1.043. Nevertheless, the Greenback's gains on Wednesday were actually driven mostly by Donald Trump's address to Congress, which boosted investor optimism.
US Initial Jobless Claims is the only event today
Thursday is a calm day compared to yesterday. There is only one event due that could have an impact on the USD/JPY exchange rate – the US Initial Jobless Claims. It is a measure of the number of people filing first-time claims for state unemployment insurance. In other words, it provides a measure of strength in the labor market. A larger than expected number indicates weakness in this market, which influences the strength and direction of the US economy. However, the given data release tends to have a low impact on the exchange rates.USD/JPY attempts to reclaim 114.00
Expectations of the Fed raising rates in March caused the US Dollar to strengthen against a basket of currencies on Wednesday, particularly against the Yen. The US Dollar, however, was unable to reclaim the 114.00 level, although did try to do so. The bearish trend-line was pierced, which suggests that another rally today is likely, with the 114.60 area being the ceiling, as a number of significant levels form a strong resistance area there. Technical studies, on the other hand, are unable to confirm this outlook, as they keep giving mixed signals. Nevertheless, the base case scenario is a close above 114.00 today.Daily chart
The breach of the bearish trend-line resulted in a surge above 114.00, with the 23.60% Fibo even being unable to limit the gains, for now at least. The pair is required to close above this area in order to continue appreciating, with the 115.00 being the next target. Once this major level is pierced, the pair will be able to reach the second down-trend near 117.00.
Hourly chart
Traders retain a positive outlook towards the Greenback, with 62% of all open positions being long (previously 66%). At the same time, the share of buy orders remains unchanged at 55%.
Right now 54% of OANDA clients are bulls, compared to 57% on Wednesday. In the meantime, Saxo Bank clients barely remain on the bullish side, being that 55% of their open positions are now long and the remaining 45% 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 02 and March 02, traders expect the US Dollar to appreciate to 114.51 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 60% 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 19% of the survey participants choosing this trading range. At the same time, the second most popular intervals were the 106.50-108.00 and the 120.00-121.50 ones, both with 12% of survey participants choosing them.