USD/JPY attempts to erase last week's losses

Source: Dukascopy Bank SA
  • The buy and the sell order ratio is equal to one
  • 59% of traders hold short positions
  • Immediate resistance lies at 115.14
  • The closest support rests around 113.60
  • Upcoming events: US JOLTS Job Openings, US Crude Oil Inventories, Japanese Current Account, Japanese Final GDP

The United States' services sector activity hit its one-year high last month, official figures revealed on Monday. The Institute of Supply Management reported its Non-Manufacturing Purchasing Managers' Index advanced to 57.2 in November from the previous month's 54.8 points. The November figure was the highest since October 2015 and marked the 82nd straight month of growth in the sector, while analysts anticipated the Index to come in at 55.3 in the reported month. Any reading above the 50 point level indicates expansion in the services sector, which accounts for more than two-thirds of the US economy.

Furthermore, the Employment Index climbed to 58.2 from October's 53.1 points, showing that hiring rose at a much faster pace in November. The Non-Manufacturing Business Activity Index rose to 61.7 from 57.7 in October, while the New Orders Index dropped to 57.0 from 57.7 and the Prices Index came in at 56.3, losing 0.3 points during November. The majority of respondents expressed a positive view of the economy. Earlier, Markit's final Services PMI for the US came in at 54.6, slightly below the 54.8 point forecast. As a result, the EUR/USD was unchanged at 1.0728, while the GBP/USD fell to 1.2712 from 1.2716 from ahead of the release and the USD/JPY rose from 114.37 to 114.62.

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Japanese GDP in focus

Today's US fundamentals are unlikely to have a significant impact on the pair, that is why attention should be paid to the Japanese data instead, such as the Final GDP. It shows the monetary value of all the goods, services and structures produced in Japan within a given period of time. GDP is a gross measure of market activity because it indicates the pace at which the Japanese economy is growing or decreasing. Another possible event is the Japanese Current Account, as it is a net flow of current transactions, including goods, services and interest payments into and out of Japan. A current account surplus indicates that the flow of capital into Japan exceeds the capital reduction. A current account deficit indicates that there is a new capital outflow from these sources.



USD/JPY attempts to erase last week's losses

The USD/JPY remained relatively unchanged on Tuesday, although a surge beyond the 23.60% Fibonacci Retracement was still successful. As a result, the given currency pair could now continue edging up, with the main goal being the 115.00 major level, also where the weekly R1 is providing immediate resistance. However, the 114.50 mark is also a psychological level to consider, as it prevented the US Dollar from climbing higher for three times during the previous week. Moreover, the Buck is now supported by a rather strong demand area, while technical indicators are able to confirm the possibility of the positive outcome.

Daily chart

© Dukascopy Bank SA

The 200-hour SMA once again proved its viability as a strong support for the USD/JPY pair, now with a trend-line also present. According to it the Greenback is likely to keep appreciating against the Japanese Yen, while any downside development is to be limited by the mentioned SMA.

Hourly chart
© Dukascopy Bank SA


Bulls keep losing advantage

There are now 59% of traders holding short positions (previously 62%), whereas the buy and the sell order ratio is now equal to one.

Meanwhile, there has been a decrease in the number of long positions at other brokers. Right now 57% of OANDA clients are bears, compared to 58% on Tuesday. In the meantime, Saxo Bank clients also remain slightly on the bearish side, being that the portion of shorts takes up 54% of the market.


Spreads (avg, pip) / Trading volume / Volatility

Traders are becoming increasingly bullish the Dollar

© Dukascopy Bank SA

According to the poll that gathered forecasts between November 06 and December 06, traders expect the US Dollar to appreciate to 110.94 yen in three months' time, while the forecast for November 30 was only 103.30 yen. It is also worth noticing that 69% of all forecasts fall above 108 yen, which is close to the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 111.00 and 112.50 yen in three months, with 17% of the survey participants choosing that trading range. Meanwhile, the second most popular interval is the 117.00-118.50 one with 14% of the votes, also followed by the 105.00-106.50 and the 112.50-114.00, both chosen by 10% of all the surveyed.

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