- SWFX market sentiment is 71% bullish (-1%)
- 56% of pending orders in the 100-pip range are set to BUY
- Bank Holiday in Japan
- Upcoming events: Japan's PPI y/y
Economic activity in the US services sector was the strongest in more than 12 years, supported by rising new orders, suggesting that the economy sustained the strong momentum in the beginning of the year. The ISM survey showed that its non-manufacturing PMI jumped to 59.9 in January, from 55.9 in the prior month.
The US economy kept expanding even before the stimulus from a $1.5T tax cut program has begun to filter through. However, that is likely to cause some concerns that the country's economy could overheat.
Quiet session
No significant fundamentals are scheduled for today. Despite Japanese banks being closed due to the National Foundation Day, the BOJ is still to release the country's Producer Price Index for January at 2350GMT.
USD/JPY could remain stable
The US Dollar was fluctuating considerably against the Yen during the previous trading session. The pair tried to edge higher in the morning but was stopped by the strong resistance of the 55-, 100– and 200-hour SMAs. It subsequently fell down to the 108.30 mark—slightly above the bottom boundary of a medium-term channel.The US Dollar might still appreciate in this session; however, gains should be limited by the aforementioned SMAs and the weekly PP near the 109.20 mark. This could pressure the pair down to the weekly S1 at 108.00.
Given that there is a bank holiday in Japan and no fundamentals coming from the United States, this session could mark no major changes to the pair's current position, unless high turbulence in the equities market result in higher demand for the Yen.
Hourly Chart
As apparent on the chart, the rate is still trading in a narrow five-week descending channel. Given the current positioning of the pair, traders might see a soon breakout to the upside that could be followed by a short-term surge within this week. Technical indicators support this scenario.
Daily chart
SWFX traders are on the long side, as 71% of open positions were bullish during the morning hours (-1%). In addition, 64% of pending orders are to buy the Greenback.
The market sentiment of OANDA traders remains strongly bullish with 68% long positions (-1%). Saxo Bank clients are likewise bullish, as 62% of open positions are long (+4%).
Spreads (avg, pip) / Trading volume / Volatility