- SWFX market sentiment is 60% bullish
- 51% of pending orders in the 100-pip range are bearish
- Pair has finally reached the 110.00 mark
- US GDP and Durable Goods at the end of the week
On Wednesday morning the currency exchange rate finally reached the 110.00 mark. The event was expected to occur for more than a week. However, the decline occurred mostly during the second part of Tuesday's trading and on early Wednesday morning.
The USD/JPY exchange rate depreciated 23 base points to the 110.68 level, following the BoJ monetary policy statement and the outlook report. Though, the pair managed to recover in the next couple of hours to be above the 111.00 mark, as the Bank's Governor made dovish remarks, sending rate higher.
The Bank of Japan kept the interest rate unchanged at a negative 0.10%, as widely anticipated, offering a more optimistic view on consumer inflation projections, underscoring the conviction that the Japan economy was making moderate, but steady progress to the 2% CPI growth target. Later, the BoJ Governor Haruhiko Kuroda indicated that the Bank was not in a position to consider the QEE quit.
US data release on Friday
As the Bank of Japan event occurred, the focus for swing traders has shifted to another release.
On Friday the Advance GDP of the United States will be published at 13:30 GMT. The GDP will be accompanied with the US Durable Goods data sets at the same time.
USD/JPY could bounce off 109.80
The strong downside momentum that prevailed in the market on Tuesday breached any previous assumptions of a limited fall.The pair plunged 62 pips during the day and continued to move in the same direction early today, as well. The Greenback dashed through various support levels, but was stopped by the bottom boundary of a four-month descending channel near 109.80.
This fall has sent technical indicators in the strongly bearish territory. This would suggest a possible period of appreciation up to the 110.50 area, especially if the US Dollar manages to surpass 110.30.
However, such falls are occasionally followed by another plunge. In case this scenario occurs, the downside potential should not exceed the 109.50 mark where the weekly S2 is located.
Hourly chart
A review of the daily chart has been conducted. It has been discovered, that by using the low levels of candles to set the support line of the long term channel down instead of the candle tails, the picture is different.
The currency exchange rate has already touched the lower trend line of the dominant channel down pattern. Due to that reason, the short term channel of the hourly chart might be broken in the near future.
The previously described review was done on Tuesday. However, on Wednesday it was noticed that also the previously drawn long term pattern's lower trend line was reached.
Daily chart
SWFX traders are on the long side, as 59% of open positions were bullish. Meanwhile, 57% of pending orders are to buy the Greenback.
The market sentiment of OANDA traders remains bullish with 60% long positions (-6%). Meanwhile, Saxo Bank clients are likewise bullish, as 54% (-1%) of open positions are long
Spreads (avg, pip) / Trading volume / Volatility