- The number of orders to acquire the Greenback went up to 73%
- The share of bullish SWFX traders lost four percentage points, and the long positions now account for 56% of the market
- 23% of traders see USD/JPY above 124.5 by June
- The nearest resistance is represented by the Bollinger band at 120.42, while the closest support is now the weekly R1 at 120.06
- Upcoming events: US Non-Farm Employment Change, US Unemployment Rate, US Average Hourly Earnings, US Trade Balance
The number of Americans filling new claims for unemployment benefits rose in the week ended February 28, breaking above 300,000 threshold. Initial jobless claims across the US increased to a seasonally adjusted 320,000 in the measured period, the Department of Labor said, following the last week's figure of 313,000. Meanwhile, continuing claims for the week ending February 14 rose to 2.421 million, compared to last week's upwardly revised reading of 2.404 million. Earlier this week ADP's report revealed that private sector employment increased by 212,000 jobs in February, following an upwardly revised 250,000 increase booked a month earlier. Today's report may show employers added 235,000 workers in February, while the unemployment rate is expected to drop to 5.6%, matching a more than six-year low. Solid job gains are encouraging as strengthening labour market indicate that the Fed may decide to increase interest rates sooner than expected. The US labour market coupled with inflation are key determinants when it comes to the debate about the timing of the monetary policy normalization.
A separate report showed US productivity dropped at a 2.2% annual pace in the December quarter compared with 1.8% rate reported in the preceding month.
Andrew Wilkinson, Chief Market Analyst at Interactive Brokers, said that "the Japanese economy probably requires further stimulus from Bank of Japan", adding that the question "whether or not massive quantitative easing at the BoJ is actually working for the domestic economy" remains topical.US Non-Farm Employment Change expected to decrease
Today at 3:30 PM GMT a number of high-importance US data will be released. The Non-Farm Employment Change is expected to worsen, while the Unemployment Rate should improve, increasing the uncertainty regarding the reaction of the Buck.
USD/JPY erased previous losses
According to Andrew Wilkinson, there are signs that "the market is getting back into that mode of expecting further stimulus." As a result, it is reasonable to "expect the Yen to continue weakening into 120s."
USD/JPY rebounded yesterday, overshooting expectations and erasing the two-day losses. The US Dollar managed to pierce through the weekly R1, tested the upper Bollinger band, and finally settled at 120.11. The Greenback keeps following the bullish pattern and is likely to rally further today, while the technical indicators are bolstering this outcome. However, this scenario might not come true if some of the major figures today miss the expectations, such as the Non-Farm Payrolls that are expected to decline.
Daily chart
On the hourly chart the pair is regaining momentum after slumping yesterday evening. The Greenback easily pierced through several resistance levels and keeps advancing before the US data release. At the moment the Buck is trading in the range between the 20-hour SMA and the upper Bollinger band.
Hourly chart
Market sentiment still bullish, but worsening
The share of bullish SWFX traders lost four percentage points, and the long positions now account for 56% of the market. Meanwhile, the number of orders to acquire the Greenback went up to 73%.
OANDA traders remain optimistic towards the US Dollar, as 57% of open positions are long. Meanwhile, the attitude of the SAXO Bank traders worsened, being that now 55% of open positions are short and the remaining 45% are long.
Spreads (avg, pip) / Trading volume / Volatility
23% of traders see USD/JPY above 124.5 by mid-May
The sentiment among Dukascopy traders is rather strong for this currency pair, as the average expectation for the end of this week is located around 119.9 level, while 66% of all votes are currently bullish.
KusumFx is expecting a positive reaction on the USD/JPY pair, as he mentioned that "USD has been in a up-trend from September 2012 and is currently trading in a very narrow range." Basing his forecast on Fibonacci retracement levels, he also added that "the price will be somewhere between 120.57 and 122.00 in early March 2015." Meanwhile, Likerty supports the bearish outcome on the Buck, as he said that the Yen is going to continue its correction, which started from 120.50's.