- SWFX market sentiment is 65% bullish
- 61% of pending orders in a 100-pip range to sell
- Gains could be capped near 109.30
- Upcoming Events: US Trade Balance, US ISM Non-Manufacturing PMI, Japan's 30-y bond Auction, Japan's Leading Indicators
The Commerce Department stated that orders for US-made goods tumbled 3.3% in July, as the demand for transportation equipment slumped in the same period.
However, capital goods orders were stronger than the prior report showed, suggesting a solid business spending in the early Q3. Moreover, an increase in production could be fuelled by expected rise in demand for motor vehicles, as residents in storm-battered Texas aim to replace damaged cars.
Main event – US ISM Non-Manufacturing PMI
The United States is to publish monthly data on Trade Balance at 1230GMT. This event is classified as having intermediate effect on the market. The main release on Wednesday is the Non-Manufacturing PMI by the US Institute for Supply Management at 1400GMT. Meanwhile, Japan will have two fundamental events on Thursday morning, namely, the 30-y Bond Auction and a release of its Leading Indicators at 0345GMT and 0500GMT.
USD/JPY leaves falling wedge
As it was expected, the currency rate continued to plunge in a falling wedge pattern, trying to reach the weekly S1 at 108.80. Due to existence of this pattern, a collective pressure from the 55-, 100- and 200-hour SMAs from the top and geopolitical tensions, the pair managed to reach this target. However, there is a need to remember that the exchange rate is simultaneously moving in a dominant descending channel. But given that the road to its bottom edge is secured by the monthly S1 at 108.48, it seems that the pair will make a premature rebound and resume the surge at least until the approaching 55-hour SMA.Hourly chart
Contrary to expectations, bears were strong enough to push the rate down to the weekly S1 at 108.80 – a level which was regarded as unreachable early on Tuesday. Thus, the rate fell 95 pips yesterday and closed at the weekly S1. Bears have managed to push the US Dollar even lower on Wednesday morning, thus trading between the weekly and monthly S1s in the 108.80/49 area for the majority of session. The nearest resistance is set by the 20-day SMA at 109.56.
Daily chart
SWFX market sentiment has slightly increased on Wednesday, as 65% of traders are holding open positions (+1%). Meanwhile, pending orders are almost at equilibrium, t.i., 51% of orders are to buy the US Dollar.
OANDA is strongly bullish on the pair, with 66% of its clients having long positions (+6%). Similar viewpoint is held by Saxo Bank clients with 63% long positions (+3%).