- The Swiss market sentiment is 51% bearish
- 51% of pending orders in the 100-pip range are set to SELL
- Minor US data on Tuesday
The USD/JPY was squeezed in and broke out on Tuesday morning. The surge was set to reach the 111.60 mark, as the rate was unopposed during the morning hours after the mentioned break out.
The Bureau of Economic Analysis released the US Prelim GDP data that came better-than-expected. Namely, the GDP grew by 4.2%, compared with the forecast 4.0%. The data release showed that the US currency should be more demanded than previously though.
An analyst at Dukascopy Bank SA comments: "There are three types of GDP releases, released a month apart from each other. The most significant version is called the Advance GDP, which is the most significant against other GDP releases. Prelim GDP is an insignificant release, which doesn't affect the market a lot. This time was not an exception."
US ISM data will cause a small bounce
The only notable event on the calendar for the USD/JPY pair during the first half of this week will be the release of the US ISM Manufacturing PMI at 14:00 GMT on Tuesday. The event is unlikely going to cause a large reaction in the currency markets, as it has caused in the past only moves of around ten pips.
USD/JPY short term analysis
The US Dollar appreciated 0.44% against the Japanese Yen since Monday's session. The currency exchange rate experienced the 100-hour and 200-hour SMAs squeeze breakout which lead the rate to move upwards during Tuesday's morning hours.In regards to the near future, the US Dollar might go upwards and bounce off the upper boundary of the large channel, which will push the rate back into the medium channel.
However, the rate might break the large channel and move towards the weekly R1 at the 111.75 mark, but the R1 resistance level should stop the rate at 111.60 level.
Hourly Chart
The previously drawn dominant descending pattern on the daily chart held its ground on Thursday and forced the currency exchange rate lower. The USD/JPY declined in the aftermath of the event and dropped down below the 111.00 level.
In regards to the future, the pair is set to soon begin the formation of a descending pattern and go down to as low as 109.00 in the upcoming month. However, note the various daily simple moving averages, monthly and weekly pivot points that will pause the fall of the USD/JPY and cause short surges upwards.
Daily chart
The Swiss Foreign Exchange retail trader sentiment remains almost neutral. On Monday, 51% of trader open positions were short.
Meanwhile, the previous bearishness in the pending orders is gone. Trader set up orders were set to sell and provide downwards momentum only in 51% of all cases, compared to the previous 54%.
58% of Saxo Bank traders are long today. Meanwhile, OANDA traders are slightly bullish, as the brokerage's clients are 54% long.
The previous expectations of a decline died, as the breaking of the SMA squeeze occurred eventually to the upside. By knowing yesterday's set up order amounts to both sides, it can be assumed that larger players provided the needed momentum for the surge, not the retail sector massively present on the Swiss Foreign Exchange.
Spreads (avg, pip) / Trading volume / Volatility