- SWFX market sentiment is 74% bullish (+3%)
- 59% (+2%) of pending orders in the 100-pip range are set to BUY
- Upcoming events: Building Permits
The fall has forced the currency exchange rate to the 105.50 mark. However, there is a new development on the charts. The currency pair has reached the lower trend line of the large scale descending channel pattern. Due to that reason a medium term retracement might occur.
The Labour Department revealed that the US Producer Price Index climbed 0.4% in January, as forecasted. Data backed-up its growth rate with a strong increase in health care and gasoline prices, which moved up 0.7% and 7.1%, respectively.
The PPI report fuelled expectations that price growth would accelerate in 2018 even with weaker correlation with inflation of consumer prices. Inflation is likely to be lifted towards the Fed's 2% target, owing to tightening job market, weak US Dollar, as well as larger government spending and tax reform.
US Building Permits
On Friday there is one notable data release to watch out for. Namely, the US Building permits data set is scheduled to be published at 13:30 GMT.
However, our analysts consider the release insignificant, as it has shown no notable fluctuations in historically. Although, be careful, as a large surprise in the data might cause a move that would be strong enough to trigger trailing stop losses.
USD/JPY falls even lower
Bears have managed to take advantage of the weaker US Dollar, thus pushing USD/JPY to a new 2017/2018 low of 105.65. As a result, the pair was testing the weekly S3 and the lower boundary of two prevailing two-month channel on Friday morning.Technical indicators suggest that the current movement south could prevail today, as well, thus sending the pair for a test of the senior channel circa 104.75. Given that the weekly S3 and the monthly S2 are located along the way, this decline might be limited to 105.00.
Meanwhile, resistance is provided by the 55– and 100-hour SMAs, the weekly S2 and the monthly S1 in the 106.70/107.50 territory.
If US Building Permits released at 1330GMT do not introduce massive volatility in the market, the pair could trade sideways in this session.
Hourly Chart
We have reviewed the daily chart. Take a look at it. One can observe that the pair is approaching a very significant support level.
Namely the support line of the channel down pattern that represents the whole year of 2017 is set to be reached in the second half of February.
Daily chart
SWFX traders are on the long side, as 73% of open positions were bullish during the morning hours (+2%). In addition, 64% of pending orders are to buy the Greenback.
Meanwhile, the market sentiment of OANDA traders remains strongly bullish with 69% long positions.
Spreads (avg, pip) / Trading volume / Volatility