- The number of orders to sell the US Dollar edged up from 55 to 47%
- 56% of all open positions are long
- Immediate resistance lies around 113.20
- The closest support rests around 112.73
- Upcoming events: US President Trump's Speech, US Current Account, Japanese Trade Balance
US industrial production was unchanged last month, while market analysts anticipated an increase, official figures revealed on Friday. The Federal Reserve reported factory production came in at 0.0% in February, falling behind analysts' expectations for a gain of 0.3%. Meanwhile, January's initially reported drop of 0.3% was revised to a 0.1% fall. However, manufacturing production, which accounts for 75% of overall industrial output, posted a 0.5% increase in February that matched the preceding month's rise. A global economic recovery, stronger business investment in equipment and appropriate inventory levels allowed manufacturers to gain momentum over the last several months. The advance in manufacturing output was in line with analysts' forecasts.
Data also showed utility output decreased 5.7%, following a 5.8% decline in January. The fall was mainly driven by unusually warm temperatures. Mining production rose 2.7% last month, boosted by oil and gas drilling. Business equipment output advanced 0.7% in February, compared to a 0.1% decline registered in the prior month, whereas production of construction supplies increased 1.3% after climbing 1.4% in January. Other data released on Friday showed mood of American shoppers jumped to 97.6 in March, according to the preliminary reading released by the University of Michigan.
Uneventful Monday
On Monday there are no significant events to influence the USD/JPY pair, with exception of President Trump's Speech. However, following the rate hike Trump's words are unlikely to spark any serious volatility. Nevertheless, tomorrow attention could be paid to the US Current Account data. It is a net flow of current transactions, including goods, services and interest payments into and out of the US. A current account surplus includes that the flow of capital into the US exceeds the capital reduction. Normally, a high reading is seen as positive, whereas a low reading is seen as negative.USD/JPY on the edge of breaking channel pattern
The Greenback suffered another loss on Friday, edging 60 pips lower, thus, providing the ascending channel's lower boundary with an additional confirmation. However, the USD/JPY pair remains under pressure and now risks breaking the pattern to the downside. The plunge could be severe, as the nearest significant area to reverse polarity rests only under 112.00. Even though technical indicators are unable to confirm the possibility of the positive outcome, from the technical perspective this outcome is more likely. The monthly PP and the 100-day SMA form immediate resistance around 113.20.Daily chart
The hourly chart is unable to provide any clearer picture or support the outlook that the USD/JPY could trade higher today, therefore, preserve the channel pattern. Instead it suggests the US Dollar is to keep edging lower, which would confirm a downside breach from the channel, with the main target then being the 111.70 mark – a tough psychological support.
Hourly chart
Bears retreated over the weekend, as now 56% of all open positions are long (previously 60%). At the same time, the number of orders to sell the US Dollar edged up from 55 to 47%.
Right now 60% of OANDA clients are bulls, compared to 57% on Friday. In the meantime, Saxo Bank clients retain a positive outlook towards the US Dollar, being that 69% of their open positions are now long and the remaining 31% are short.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar
According to the poll that gathered forecasts between February 20 and March 20, traders expect the US Dollar to appreciate to 115.39 yen in three months' time, while the forecast for March 31 was 117.66 yen. It is also worth noticing that 67% of all forecasts fall above 114 yen, which is above the current spot price. The majority of people voted expect the US Dollar to cost somewhere between 118.50 and 120.00 yen in three months, with 21% of the survey participants choosing this trading range. At the same time, the second most popular intervals were the 106.50-108.00, the 114.00-115.50 and the 120.00-121.50 ones, all with 12% of survey participants choosing them.