- SWFX market sentiment is 53% bearish
- 55% of pending orders are set to buy
- Significant resistance is located circa at 111.60
- Upcoming Events: US Advance GDP q/q, US Advance GDP Price Index q/q, US Employment Cost Index q/q, US Revised UoM Consumer Sentiment and Inflation Expectations, FOMC Member Kashkari Speaks y/y
The initial reaction to the release of the Census Bureau's report on the US durable goods orders was limited, as markets were focusing on the underlying data rather than the jump in the headline measure, which left the USD/JPY currency pair holding below the 111.40 mark. The report showed that total orders for durable goods in the US surged 6.5% over the course of June compared with a 3.2% uptick expected by economists, while the core gauge posted a 0.2% gain, missing analysts' forecasts for a 0.4% climb in the reported month.
Overall, the data released yesterday suggested a steady underlying improvement in conditions despite the fact that the surge was mainly driven by a sharp rise in aircraft orders, which sent capital goods orders soar 19% over the month of June.
US Advance GDP for Q2 in focus
All heads in this session will be certainly turned towards the United States which is to release a report on Advance GDP for the second quarter of 2017 along with its Price Index at 1230GMT. Likewise, the US is to publish quarterly Employment Cost Index and revised Consumer Sentiment from the University of Michigan at 1230GMT and 1400GMT, respectively. Finally, the day will finalise with a speech by Neel Kashkari, the President of the Federal Reserve Bank of Minneapolis, at 1720GMT.
USD/JPY fails to rise above 200-hour SMA
On Thursday, the US Dollar was driven by bulls that pushed the given currency through the 100– and 55-hour SMAs and the monthly PP. Nevertheless, a resistance cluster formed by the weekly PP and the 200-hour SMA proved to be a solid upper limit that reversed the rate down to a relatively similar level as on Thursday morning. The failure to reach the upper boundary of the symmetrical triangle indicates that this pattern may not be strong enough any longer to confine the pair in its bounds. Thus, it is quite likely that the current momentum downwards is to persist until the weekly S1 at 110.48, possibly. Meanwhile, the upper limit could be the 100-hour SMA and the monthly PP or in case of solid upside risks resulting from US fundamentals —even the aforementioned 200-hour SMA circa 111.70.Hourly chart
Despite demonstrating high volatility on Thursday, USD/JPY closed with only slight gains. The rate halted at the monthly PP at 111.39 – a level that could not be surpassed in this session, as well. It is expected that gains are capped circa 111.70 where the 100- and 55-hour SMAs and the weekly PP are located, while losses should stop near the weekly S1.
Daily chart
The bearish market sentiment still dominates in this session, as the number of open positions is 53% short (unchanged from Thursday). Meanwhile, 55% of pending orders are to buy the US Dollar.
On the other hand, OANDA clients are bullish on the pair, as 57% of all open positions are long. Likewise, similar viewpoint is held by Saxo Bank clients who hold 55% long positions.