USD/JPY: down-trend breach possible

Source: Dukascopy Bank SA
  • 48% of all pending orders are to buy the Buck
  • 65% of traders hold long positions
  • Immediate resistance lies around 112.75
  • The closest support rests around 111.75
  • Upcoming events: US GDP Annualized, US Goods Trade Balance, US CB Consumer Confidence, Chicago PMI, US Trump's Congress Speech

New orders for US-made capital goods advanced more than expected in January due to strong demand for passenger airplanes and new bookings for fighter planes and related military equipment. According to the Commerce Department, total durable goods orders spiked 1.8% in the past month compared with a downwardly revised 0.8% reading registered in December. The main driver for the jump was a significant increase in orders for transportation goods which surged 6.0% in January. Orders excluding aircraft fell 0.2%, missing expectations for a 0.5% rise on the month. Moreover, there were notable decreases in orders for electrical equipment, appliances and components as well as computers and electronic products. In the meantime, non-defense capital goods orders went down 0.4%, following an upwardly revised 1.1% gain in December, while machinery orders soared 0.5%, giving a 4.3% annual gain which is likely to heighten confidence in manufacturing outlook.

Overall, strong durable goods report followed recent growth in consumer spending and home sales as the Greenback stabilised and oil prices resumed growing. In addition, the Trump administration plans to cut corporate taxes and diminish regulations are set to help businesses, though surrounding uncertainty might prevent proceeding with investments in the near term.

Watch More: Dukascopy TV


Trump's speech to overshadow fundamentals

Since there are no events from the UK side on Tuesday, all attention turns to the US fundamentals, such as the Annualized GDP. It shows the monetary value of all the goods, services and structures produced within a country in a given period of time. GDP Annualized is a gross measure of market activity because it indicates the pace at which a country's economy is growing or decreasing. Another event worth paying attention to will be the CB Consumer Confidence. It captures the level of confidence that individuals have in economic activity. Finally, the Chicago PMI. It captures business conditions across Illinois, Indiana and Michigan. This index is an indicator of business trends and it is interrelated with the ISM Manufacturing Index. It is widely used to indicate the overall economic condition in the US. Nevertheless, the most impact is likely to be from US President Donald Trump's speech later today, where he is expected to unveil his new tax plan.



USD/JPY: down-trend breach possible

There were no surprises in the USD/JPY pair's performance on Monday, being that the Buck easily outperformed the Yen, with volatility limited by the immediate resistance area. The Buck still has room for another rally, with the main target being the supply cluster around 113.32, represented by the two-month bearish trend-line and the weekly R1. Trump's highly anticipated speech today could provide the US currency with sufficient impetus for a surge beyond this target, but with the third resistance cluster most likely limit those possible gains. Meanwhile, the support remains unchanged, namely the three-month zone circa 111.75.

Daily chart

© Dukascopy Bank SA

A surge on Monday caused the down-trend to be fully realised, which now suggests the USD/JPY pair is to continue weakening today. The 200-hour SMA is somewhat bolstering the trend-line, which should prevent the exchange rate from edging higher, at least from the technical side. Political factors are likely to be the main driver today, thus, the outcome could be unpredictable.

Hourly chart
© Dukascopy Bank SA


Bears remain in charge

Today 65% of traders hold long positions, while 48% of all pending orders are to buy the Buck (previously 61% and 59%, respectively).

Right now 60% of OANDA clients are bulls, compared to 63% on Monday. In the meantime, Saxo Bank clients remain on the bullish side, being that 62% of their open positions are now long and the remaining 38% are short.


Spreads (avg, pip) / Trading volume / Volatility

Traders are becoming increasingly bullish on the Dollar

© Dukascopy Bank SA

According to the poll that gathered forecasts between January 28 and February 28, traders expect the US Dollar to appreciate to 114.05 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 56% 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 between 114.00 and 115.50 yen in three months, with 19% of the survey participants choosing this trading range. At the same time, the second most popular interval was the 106.50-108.00 one, with 17% of survey participants choosing it.

Actual Topics

Subscribe to "Fundamental Analysis" feed

Subscribe
To learn more about Dukascopy Bank CFD / Forex trading platform, SWFX and other trading related information,
please call us or make callback request.
For further information regarding potential cooperation,
please call us or make callback request.
To learn more about Dukascopy Bank Binary Options / Forex trading platform, SWFX and other trading related information,
please call us or make callback request.
To learn more about Dukascopy Bank CFD / Forex trading platform, SWFX and other trading related information,
please call us or make callback request.
To learn more about Crypto Trading / CFD / Forex trading platform, SWFX and other trading related information,
please call us or make callback request.
To learn more about Business Introducer and other trading related information,
please call us or make callback request.
For further information regarding potential cooperation,
please call us or make callback request.