- SWFX market sentiment is 62% bearish
- 55% of pending orders in the 100-pip range are to SELL
- US Consumer Confidence at 14:00 GMT
As it was expected, the USD/JPY currency exchange rate increased its volatility on Tuesday and surged.It occurred due to the Bank of Japan leaving their base interest rate unchanged. Combined with the decreased US Dollar supply, that is a clear indicator that the USD/JPY is set to head even higher.
The Census Bureau released the monthly Durable Goods Orders that came out lower-than-expected of 1.0% compare with forecasted 3.0%, but better than previous period.
"A senior investment manager Patrick O'Donnell, from Aberdeen Standard Investments, said: "It looks like the European side is trying to acquiesce to Trump's demands. They've got more to lose if tariffs look to be placed on autos, for example. So over multi-month horizon, we'll probably see lower tariffs globally".
First minor release of the week
The announcement of the Bank of Japan interest rate already caused its damage in the morning. However, there is still something set to occur during the day that might influence the financial markets through the US Dollar.
Namely, the CB Consumer Confidence release is set to be published at 14:00 GMT. Note that the data release will be covered on the bank's live webinar platform. The coverage will begin at 13:50 GMT.
USD/JPY increases volatility
The previously-low volatility of USD/JPY changed early today when the Bank of Japan pledged to keep its interest rates at low levels, as the rate started fluctuating between the 200-hour SMA and a senior channel line. The US will release several data sets today; thus, the current movement sideways might end today.Given that the Greenback has moved above the 55– and 100-hour and 200-period (4H) SMAs, these moving averages might provide support for the rate.
However, traders should still consider the strong resistance cluster set by the 55– and 100-period SMAs and the weekly R1 at 111.55. A breakout from this level should be followed by a surge up to 113.00 in the medium term. Technical indicators suggest that this appreciation might occur within the following week.
Hourly Chart
The lower trend line of the dominant ascending channel pattern has continued to hold its ground, as the currency has continued to book higher low levels.
However, the currency exchange rate is set to face strong resistance levels each 50 base points. Namely, next resistance is at 111.50 mark. Afterwards a resistance is at 112.00, and above that level next resistance will be near 112.50.
Daily chart
SWFX traders are SHORT on the USD/JPY pair, as 62% of open positions were bearish during the morning hours. Meanwhile, Swiss trader set up orders remain almost neutral, as 51% of all set up orders are to sell the US Dollar in favour to the Japanese Yen.
It can be deducted from this information that retail traders are expecting the surge to continue. However, they will not provide the needed momentum for a push higher, because everyone, who wanted to be long on the pair, already have opened their positions.
Meanwhile, the market sentiments of OANDA traders are bullish on the USD/JPY pair as 58% of open positions are long. In addition, Saxo bank traders are 51% bullish in regards to this exchange rate.
Spreads (avg, pip) / Trading volume / Volatility