- SWFX market sentiment is 46.80% bearish
- 50.50% of pending orders in 100-pip range are set to buy
- Significant resistance is located circa at 110.86
- Upcoming Events: US Average Hourly Earnings, Non-Farm Employment Change and Unemployment Rate
On Thursday, the US Dollar posted a sharp fall against the Yen after the ISM report showed softer-than-expected growth in non-manufacturing sectors. After the release, the USD/JPY exchange rate showed an immediate 0.09% fall to 110.259, a sign for a stronger bearish sentiment. The Institute of Supply Management reported that its Non-Manufacturing PMI dropped more than anticipated to 53.9 points in July after rising to 57.4 in the previous month. Weak recent reports are set to discourage the Federal Reserve to make one more rate hike this year and keep the Greenback biased downwards. In addition, the NFP report on Friday is more likely to disappoint forecasts, while wage component would determine whether higher interest rates are allowable.
The USD/JPY exchange rate edged higher after the private survey showed a modest increase in job creation. After the publication, the US Dollar rose against the Japanese Yen by 0.04% to reach the 110.76 mark. ADP reported that non-farm sectors added 178K jobs in July, the second weakest change this year, compared with the upwardly-revised 191K increase in the previous month. According to the report, a slight fall in manufacturing jobs was offset by higher employment for service-related positions. Figures suggested that job creation remained strong enough to see the economy nearing to full employment. However, preliminary data is unlikely to determine the current condition of the US labour market, as the official report is set to come in on Friday.
US Unemployment Rate in focus
At 12:30 GMT the US Bureau of Labor Statistics will give an insight about the growth of Americans' average hourly earnings and, most importantly, change in the number of employed people. The data release will be covered by the Dukascopy Research Team on the bank's live webinar platform.
USD/JPY drops to 110.11
Unfortunately for the Greenback, none of the US macroeconomic data released yesterday did not justify analysts' expectations. As a result, the pair, firstly, slipped below the 55- and 100-hour SMAs and, secondly, below the weekly S1 at 110.11. However, after the second data release the currency rate became substantially oversold and, for this reason, no further drop has followed. Most probably, during Friday's trading session the buck is going to try to restore lost positions. If the pair succeeds to gain a foothold at the above weekly S1, it might obtain a necessary impulse to try to reach the 200-hour SMA near the 110.87 mark. Nevertheless, this attempt might be easily undermined by another release of a set of the US data at 12:00 GMT.Hourly chart
Due to disappointing macroeconomic news from the North America, the currency pair fell out from a symmetrical triangle and even crossed the weekly S1 110.11. On the one hand, this fall should not symbolize dissolution of this long-term pattern. On the other hand, a new date release from the US at 12:30 GMT might deeper the yesterday's drop and drive the currency pair closer to the weekly S2 at 109.50.
Daily chart
SWFX traders remain entered into the neutral zone, as 53% of open positions are short, compared to 54% on Thursday. Meanwhile, almost 59% of pending orders are to buy the US Dollar.
On the other hand, OANDA clients are bullish on the pair, as 60.80% of all open positions are long. Likewise, similar viewpoint is held by Saxo Bank clients who hold 58.10% long positions (+1.5%).