- SWFX market sentiment is 67% bearish (+5%)
- 54% of pending orders in the 100-pip range are to BUY
- Significant resistance is located at 113.70
- Upcoming events: US Employment Cost Index q/q, US Chicago PMI, US CB Consumer Confidence
The Japanese Yen edged lower against the Greenback, following the Bank of Japan's monetary policy report. The USD/JPY currency pair rose 15 base points or 0.13% to continue consolidation in the narrow range between the 113.05-113.25 marks.
The Bank of Japan announced its decision to maintain the key interest rate unchanged at a negative 0.1% and keep the target for the ten-year government bond yield at 0%. The Bank postponed its monetary policy changes amid signs of improvements in the country's economy, still anticipating the inflation growth to the elusive 2% target. The following review of the BoJ projections showed that it cut price growth forecasts for 2017, but kept optimistic view for the next years.
US data reports
Three sets of data from the Unites States are to be released in this session. The US Bureau of Labour Statistics will publish the Employment Cost Index for the third quarter of 2017, while ISM-Chicago Inc is to release the Chicago Purchase Managers' Index at 1230GMT and 1345GMT, respectively.
The most important event that could shake the market today is the CB Consumer Confidence for the month of October to be released at 1400GMT.
USD/JPY trades near 113.10 after BOJ meeting
On Tuesday, the Bank of Japan left the interest rate, target inflation and core inflation forecast unchanged. In other words, they still amount to -0.1%, 2% and 1.8%.However, since this decision was widely expected, the Yen did not gain much value against Dollar. In fact, it stuck at the weekly S1 at 113.13. However, this correction is likely to last only until release of the American data. Depending on the actual figures the pair might either surge to the combined resistance set up by the 200-, 100- and 55-hour SMAs near 113.60 or slip further to the weekly S2 located at the 112.58 level.
From daily perspective, the pair is expected to start gradually moving in the southern direction, as previous two days marked a long awaited breakout from the rising wedge formation.
Hourly chart
Downside risks prevailed on Monday, thus pushing the rate below the lower boundary of the medium-term ascending wedge. This move suggests that some bearish momentum might drive the market during the following trading days and even longer.
The southern side is supported by the weekly S1 and the 20-day SMA at 113.14 and 112.93, respectively, while the upside is guarded by the distant weekly PP at 113.79.
Daily chart`
SWFX market sentiment remains bearish early in this week, as 67% of traders are holding short positions (+5%). Meanwhile, pending orders remain at equilibrium for the third consecutive session.
The bearish market sentiment of OANDA traders has remained at Monday's level, as 57% of open positions are short. Meanwhile, Saxo Bank clients are still bearish with 52% short positions (also unchanged).