- 69% of all pending orders are to buy the Buck
- 51% of all open positions are long
- Immediate resistance lies at 111.87
- The closest support rests at 110.97
- Upcoming events: US ADP Non-Farm Employment Change, US Services PMI, FOMC Statement, US Federal Funds Rate, US Crude Oil Inventories
The Purchasing Managers' Index for the US manufacturing sector grew less than analysts estimated. According to the Institute for Supply Management, the PMI lost 2.4% compared to the previous month and tumbled to 54.8%, while experts anticipated only a slight decrease of 0.6%. Although in April the PMI rose at the slowest pace this year so far, it still remained above the 12-month average of 53.6%. The ISM report showed that the New Orders, Employment and Supplier Deliveries Indices dropped 7.0%, 6.9% and 0.8%, accordingly. Meanwhile, both Inventories and Prices Indices posted a 2% advance, which indicated that manufacturing companies stockpiled more raw materials than in the previous month and their costs increased. Nevertheless, all 18 manufacturing industries, excluding the apparel, leather and allied products industry, reported growth in April. In addition, all 15 commodities included in the report rose in price. Rising prices confirmed the view that inflation growth remained solid.
Overall, all Indices remained above the 50% threshold and, thus, confirmed the general, long-term upward trend. Even though GDP figures released on Friday last week missed forecasts, analysts suggest that the US economy will likely regain momentum in the upcoming quarters.
No significant events until Wednesday
Since there are no important economic data releases scheduled for today, all focus turns to the fundamental data on Wednesday, such as the US ADP Non-Farm Employment Change. It is a measure of the change in the number of employed people in the US. A rise in this indicator has positive implications for consumer spending, stimulating economic growth. The Federal Funds Rate decision is unlikely to have any impact, as no rate increase is expected until June, but the tone of the FOMC Statement could have either positive or negative effect on the US Dollar.
USD/JPY to climb over 112.00
Although the immediate resistance was not pierced yesterday, the USD/JPY currency pair still took a large step towards reaching the descending channel's upper boundary. Yesterday's rally was limited by the 55-day SMA, but the Buck is expected to disregard this resistance today and, thus, easily reclaim the 112.00 major level. Such a bullish development would leave the US Dollar with just one other supply area on its path, formed by the weekly R1 and the upper Bollinger band circa 112.40. Once this zone is overcome, the given pair could reconfirm the channel's down-trend; however, a breakout from the pattern is unlikely, due to a number of other levels bolstering the trend-line.Daily chart
Since the USD/JPY continued to appreciate this week, the pair could soon reach the descending channel's resistance line near 113.00, where resistance should be sufficient to cause the bearish momentum to return. In this case the rising wedge would eventually be breached to the downside, as it is supposed to, and the channel's support line reached once more.
Hourly chart
Today 51% of all open positions are long (previously 53%), whereas 69% of all pending orders are to purchase the Greenback.
Right now 57% of OANDA clients are bulls, compared to 58% on Monday, the bullish sentiment has been holding around the same level for some time now. In the meantime, Saxo Bank clients barely manage to retain a positive outlook towards the US Dollar, being that 50% of their open positions are now long and the remaining 50% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between April 02 and May 02, traders expect the US Dollar to appreciate to 110.43 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 55% of all forecasts fall under 111 yen, which is still above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 112.50 and 114.00 yen in three months, with 17% of the survey participants choosing this trading range. At the same time, the second most popular intervals were the 108.00-109.50 one, with 15% of survey participants each of them.