- The Swiss market sentiment is 52% bullish
- Trader set up pending orders in the 100-pip range are neutral
- Canadian and US data are incoming
On Wednesday, the USD/JPY had returned to the upper trend line of a dominant pattern. Whether the trend line holds or not will be of utmost importance.
The last notable released data set, which influenced the USD/JPY currency exchange rate, was published last week.
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."
Canadian data on Wednesday
On Wednesday, only the Canadian government and central bank will release data that will be notable enough for it to be monitored by Forex traders.
Namely, the Canadian Trade Balance will be published at 12:30 GMT and the Bank of Canada will publish their Overnight Rate at 14:00 GMT. Both data releases will be covered by Dukascopy Analytics. The data coverages will begin ten minutes before the data is released, respectively, 12:20 GMT and 13:50 GMT.
Meanwhile, note that most major financial instruments will start suddenly bouncing around on US macroeconomic data releases on Thursday, as the ADP Non-Farm Employment Change will be released at 12:15 GMT and the ISM Non-Manufacturing PMI will be out at 14:00 GMT.
Moreover, it will continue into Friday. On Friday, at 12:30 GMT three US employment data sets will be published.
USD/JPY short term analysis
The currency exchange rate experienced the 55-hour and 200-hour SMAs squeeze breakout which lead the rate to move upwards during Wednesday's morning hours.In theory, the rate should take the upper boundary of the large channel as a resistance barrier and bounce off the line to move backwards into the channel.
However, the USD/JPY could break the large channel and go up towards the weekly R1 at the 111.75 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. During the morning hours of the day, 52% of trader open positions were long. Previously, they were 52% short.
Meanwhile, trader set up orders, which could provide momentum to one or the other side continue to bounce around from neutral bullishness to neutral bearishness. On Wednesday, they had balanced and were almost perfectly neutral.
57% of Saxo Bank traders are long today. Meanwhile, OANDA traders are also bullish, as the brokerage's clients are 55% long.
The previous expectations of a decline died, as the breaking of the SMA squeeze occurred eventually to the upside. By knowing 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, which is massively present on the Swiss Foreign Exchange.
Spreads (avg, pip) / Trading volume / Volatility