- SWFX market sentiment is 67% bearish (-1%)
- 56% of pending orders in the 100-pip range are to SELL
- Significant resistance is found near 113.80
- Upcoming events: BOJ Governor Kuroda and Fed Chair Yellen to speak, US PPI and Core PPI m/m, Japan's Preliminary GDP q/q
The Treasury Department stated that the US Federal Government had a deficit of $63B over the course of October, where higher spending was attributed to disaster relief after a hurricane season.
Steven Mnuchin, the US Treasury Secretary, projected that the tax-cut plan is likely to accelerate the US economic growth, which would raise revenue and narrow a fiscal gap. However, higher-than-anticipated deficit highlighted concerns that excess of spending over receipts could increase further.
Abundance of fundamentals
Contrary to Monday, this trading session offers a variety of fundamental events.
First, four central bank governors are to participate in a panel discussion titled "At the heart of policy: challenges and opportunities of central bank communication" in Frankfurt, Germany, at 1000GMT, including the Fed Chair Janet Yellen and the BOJ Governor Haruhiko Kuroda.
Second, the United States is to release the Producer Price Index and the Core Producer Price Index at 1330GMT.
Last, Japan will publish its preliminary GDP for the third quarter of 2017 at 2350GMT.
USD/JPY trades in descending channel
In result of the previous trading session previously dominant descending channel ceased to exist, as the currency rate broke through its upper boundary that was additionally protected by the 100-hour SMA. As a result, now movement of the pair is guided by the four-day long ascending channel.However, that pattern might not sustain for long, as the exchange rate is approaching towards another combined resistance formed by the 200-hour SMA and the weekly PP at 113.80. Unless the buck receives a proper impulse, for instance, from the Fed Chair Yellen speech at the Central Bank Communications Conference, it is expected to fail to advance any further.
On the other hand, the rapid fall might not happen as well, as the southern side is additionally backed up by a combination of the 55- and 100-hour SMAs.
Hourly chart
After closing slightly above the 20-day SMA last Thursday, the US Dollar failed to leave this short-term moving average and has thus been trading along this line ever since.
The pair is currently located between the weekly and monthly PPs in the 113.20/80 area. However, it is likely that this range is breached during this session. The next resistance is the distant weekly R1 at 114.50.
Daily chart
SWFX market sentiment has decreased by one percentage point in this session, as 67% of traders are holding short positions (-1%). Meanwhile, pending orders are still at equilibrium.
The bearish market sentiment prevails for OANDA traders, as 55% of open positions are short (-1%). Meanwhile, the number of open positions of Saxo Bank clients is 53% long (-1%).