- The portion of sell orders surged from 37 to 66%
- Market sentiment remains bullish at 67%
- Immediate resistance lies at 111.23
- The closest support rests at 110.27
- Upcoming events: US Initial Jobless Claims, US Average Hourly Earnings, US Non-Farm Employment Change, US Unemployment Rate
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.
A calm before the storm
Thursday is a calm before the storm, as only the US Initial Jobless Claims are due before Friday's NFP data. The Jobless Claims are 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.USD/JPY stuck around 110.75
The USD/JPY currency pair weakened for the fourth time in a row yesterday, unable to maintain trade in the green zone. According to technical studies, another leg down should take place, however, that might not be the case. The weekly S1 is providing immediate support at 110.27, while the 110.50 level is providing additional psychological support, which altogether could help the Greenback to post a mild recovery. Nevertheless, gains are unlikely to exceed 50 pips, as the weekly PP represents the upper border at 111.23. The pair is expected to remain within this trading range, namely between the weekly S1 and PP.Daily chart
For the fourth consecutive week the US Dollar has been sliding down against the Japanese Yen, but appears to have found support last Monday. At the momentum trade is contained within two trend-lines, with risks skewed to the downside, as the 200-hour SMA is bolstering the resistance line.
Hourly chart
Although not as strong as yesterday, but market sentiment remains bullish at 67%. The portion of sell orders surged from 37 to 66%.
Right now 65% of OANDA clients are bulls, compared to 62% on Wednesday, the bullish sentiment has been holding around the same level for some time now. In the meantime, Saxo Bank clients retain a positive outlook towards the US Dollar, being that 65% of their open positions are now long and the remaining 35% 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 06 and April 06, traders expect the US Dollar to appreciate to 114.02 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 54% 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 either between 115.50 and 117.00, or between 117.00 and 118.50, or even between 118.50 and 120.00 yen in three months, with 13% of the survey participants choosing each of these trading ranges. At the same time, the second most popular intervals were the 106.50-108.00 and the 112.50-114.00 ones, with 11% of survey participants choosing each of them.