- SWFX market sentiment is 57% bearish (+1%)
- 55% of pending orders in the 100-pip range are to SELL
- Strong resistance is located near the 112.70 mark
- Upcoming events: FOMC Members Kaplan and Harker to speak, US ISM Manufacturing PMI
The Greenback made the last attempt to rise against the Yen before falling sharply on non-negative US economic data. The USD/JPY added 5 base points, ahead of the sharp fall to the 111.74 area. However, bulls put the pair back to the pre-data level of 112.60. 112.0 area.
US consumer inflation growth weakened in October, as the hurricane-related increase in purchases of motor vehicles started to fade. The Fed's closely watched inflation measure, the Core PCE Price Index excluding energy and food increased 1.4% year-over-year in October, though the figure undershot the bank's 2% target for more than 5 years. Recent economic data strengthened projections for the Fed to raise borrowing costs once again in December.
US ISM Manufacturing PMI
The economic calendar for Friday includes one important data release, namely, the US ISM Manufacturing PMI for the month of November to be released at 1500GMT.
Meanwhile, the President of the Federal Reserve Bank of Dallas Robert Kaplan is to participate in a panel discussion at the Border Economic Development and Entrepreneurship Symposium at 1430GMT, while the President of the Federal Reserve Bank of Philadelphia Patrick Harker will speak about approaches to economic growth at 1515GMT.
USD/JPY tests strong resistance at 112.70
Unfortunately, neither existence of a rising wedge formation, nor the weekly R1 or the 50% Fibonacci retracement level stopped the rate from breaking to the top. However, this does not automatically mean dissolution of the pattern, as it still stay in force by making readjustment of the boundaries.Regardless of existence of the figure, in order to continue moving upwards, the pair will need to cross strong resistance zone located between the 112.62 and 12.70 marks. In addition to that, this barrier is strengthened by the 55-day SMA that lies at 112.75 as well as the 50% Fibonacci retracement level located at 113.00.
In support of this assumption, 55% of pending orders in 100 pip range and 59% in 50 pip ranges are set to sell.
Hourly chart
USD/JPY closed the Thursday's trading session strong with a 61-pip gain. As a result, the pair breached the weekly R1 at 112.49.
On Friday morning, it remained stranded between this mark and the 55-hour SMA and the weekly PP circa 112.75 from above. It is likely that the latter pressures the rate lower; thus, the Greenback might be tended southwards during this session.
Daily chart
The bearish SWFX sentiment has increased by one percentage point on Friday, as 57% of open positions are short (+1%). Meanwhile, 56% of pending orders are to buy the Greenback (-5%).
OANDA traders are bullish on the pair, with 60% of open positions being long (+4%). In addition, the number of open positions of Saxo Bank clients is 52% long (unchanged from Thursday).