- SWFX market sentiment is 70% bullish
- Pending orders in the 100-pip range are 54% to SELL
- Nothing from macroeconomics on Tuesday
The US Dollar was recovering against the Japanese Yen on Tuesday. The reason for that was the fact that the currency exchange rate had hit the support of a medium term channel. That event has caused the formation of a junior ascending pattern.
The ISM Manufacturing PMI release presented a stronger-than-anticipated data, causing a further Dollar strengthening.
The ISM stated that the US Manufacturing PMI increased from 59.1 in January to 60.8 in February, representing the highest mark since May 2004. The US manufacturing activity strengthened in the reported month mainly due to expending exports that are showing their highest growth rate since April 2011.
In fact, growing employment rate also was one of the factors driving the overall expansion in the domestic manufacturing sector.
This week's events
Tuesday is set to be an empty day for macroeconomic release traders, as there are no even worth mentioning releases scheduled for the day.
During the rest of the week markets will concentrate on the US labour data, which will be released with the ADP payrolls on Wednesday, and official employment data on Friday. These data releases will be covered by the Dukascopy research team on the bank's live webinar platform.
However, the most notable event, which is set to affect the USD/JPY pair, will be the publication of the BOJ Policy Rate, the Monetary Statement and the following Bank of Japan's press conference on Friday.
USD/JPY likely to decline
Upside risks prevailed in the market on Monday, thus allowing the US Dollar to advance by 1.0% against the Yen.The pair managed to surpass the 55-hour SMA along the way, but was hindered by the weekly PP and the 100-hour moving average circa 106.20—the level where it was located on Tuesday morning.
It seems that this strong daily surge has exhausted the strength of bears. This could allow for the prevalence of the bearish sentiment in this session. This scenario is likewise confirmed by strongly bearish technical indicators.
The nearest resistance is set by the 55-hour SMA circa 105.80, while a more probable downside target could be the 2017 low of 105.35. Conversely, a move above the 107.00 is unlikely today.
Hourly Chart
As there have been more than one adjustment to the long term descending pattern. It can be stated that there might be bias at play from a technical perspective.
Namely, due to the couple of variations of how the pattern can be drawn, there are fluctuations in various descending patterns, depending on who is at play in the market at the time. However, the trend is still downwards aimed in most long term scenarios.
Daily chart
SWFX traders are on the long side, as 70% of open positions were bullish during the morning hours. In addition, 56% of pending orders are to buy the Greenback.
Meanwhile, the market sentiment of OANDA traders remains strongly bullish with 69% long positions. In addition, Saxo bank traders are 59% bullish in regards to this pair.
Spreads (avg, pip) / Trading volume / Volatility