- SWFX market sentiment is 61% bearish (+1%)
- 55% of pending orders in the 100-pip range are to buy the Pound
- Strong resistance is located near the 113.10 mark
- Upcoming events: US Trade Balance, US ISM Non-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.
ISM Non-Manufacturing PMI
This trading session includes two sets of fundamentals. The US will publish its Trade Balance for October at 1330GMT and the ISM Non-Manufacturing PMI for the previous month at 1500GMT.
USD/JPY meets strong resistance at 113.00
As it was suggested yesterday, the currency exchange rate made a fully-fledged breakout from a rising wedge formation after encountering resistance posed by the 50% Fibonacci retracement level at 113.00. However, the plunge was not deep, as southern side was secured by two moving averages and another 50% retracement level located at 112.45.As long as there are no disappointing political news coming from the United States, the rate is projected to keep climbing back to the 113.00 mark. But before that it might be temporarily stopped by the monthly PP at 112.70.
Nevertheless, the rising 55- and 100-hour SMA are expected to continue stimulating the upwards movement and simultaneously secure the bottom boundary of a currency active junior ascending channel.
Hourly chart
Despite the prevalence of the bullish sentiment early on Monday, bears managed to take the upper hand during the day and thus pushed the US Dollar through the combined support of the 55-day SMA and the monthly PP.
As apparent on the chart, the Greenback is trying to test this area one more time. In order to surpass it, bulls will need to gather strong momentum. This might be done during the ISM Non-Manufacturing PMI data release.
Daily chart
The bearish SWFX sentiment has increased by one percentage point this Tuesday, as 61% of open positions are short. Meanwhile, 58% of pending orders are to buy the Greenback (+2%).
OANDA traders are bullish on the pair, with 52% of open positions being long (-2%). In addition, the number of open positions of Saxo Bank clients remains 51% long for the second consecutive session.