- SWFX market sentiment is 51% bearish
- 60.60% of pending orders in 100-pip range are set to buy
- Significant resistance is located circa at 111.15
- Upcoming Events: US ADP Non-Farm Employment Change
Manufacturing growth in the US almost matched growth forecasts, but slightly weaker-than-expected figures failed to support the Greenback significantly. Right after the data were released, the USD/JPY currency pair went to the 110.145 area, or 0.01% higher, but paired gains after that. The Institute for Supply Management stated that its Manufacturing Activity Index came in at 56.3 in July, compared with 57.8 registered in the prior month, though 15 out of 18 industries still indicated expansion. Although production, employment and new orders rose at a slightly weaker pace, they kept pointing to stable economic growth in the US. In addition, experts suggested that some weakness in recent reports is unlikely to affect the normalisation of the Fed's monetary policy.
Stronger-than-expected US pending home did not manage to support the USD/JPY exchange rate. Following the release, the Yen appreciated against the US Dollar by 0.053% to be seen trading at 110.46. The National Association of Realtors reported that the Pending Home Sales Index rose twice as much as anticipated by a seasonally adjusted 1.5% in July, following an upwardly revised 0.7% drop in the prior month. Nevertheless, the strong increase offset previous declines only partially and suggested that existing home sales are likely to increase in the near term, as fewer available properties forced buyers to act immediately. Analysts expect housing sector to continue recovering after being stymied by the lack of homes, which led to higher prices.
US Manufacturing PMI in focus
Today at 12:15 GMT the Automatic Data Processing will release information on the US Non-Farm Employment Change that is supposed to give an early insight at employment growh. The data release will be covered by the Dukascopy Research Team.
USD/JPY encounters strong support level
Contrary to expectations, the weekly S1 located at the 110.11 level proved to be a very strong support barrier. Namely, it managed to neutralize multiple attempts of the currency exchange rate to slide downwards, including the 34-pip fall that happened in the middle of the day, under pressure from the 55-hour SMA. As soon as the pair made a fully-fledged rebound, it started to climb upstairs, crossing the above 55- and 100-hour SMAs. Most likely, the surge will be stopped somewhere between the 111.00 – 111.20 levels, as they represent a location of the combined resistance level formed by the 200-hour SMA and the weekly PP. On gradual decay of the upside momentum also point out certain technical indicators, suggesting that strength of the uptrend is coming to an end.Hourly chart
There has nothing changed significantly since yesterday. The currency exchange rate has only additionally confirmed the scenario expressed previously. Namely, that the pair will make a fully-fledged rebound from the triangle's lower support line and head towards the combined resistance level set up by the 55- and 100-day SMAs, the monthly PP at 111.6586 and the weekly R1 at 111.76.
Daily chart
SWFX traders remain entered into the neutral zone, as 51% of open positions are short, compared to 55% on Tuesday. Meanwhile, almost 60% of pending orders are to buy the US Dollar.
On the other hand, OANDA clients are bullish on the pair, as 61.50% of all open positions are long. Likewise, similar viewpoint is held by Saxo Bank clients who hold 54.30% long positions (+0.30%).