- SWFX market sentiment is 62% bearish (-5%)
- 51% of pending orders in the 100-pip range are to SELL
- Significant support is located at 113.65
- Upcoming events: US ADP Non-Farm Employment Change, US ISM Manufacturing PMI, FOMC Statement, Federal Funds Rate, Japan's Monetary Base y/y
The Japanese Yen edged lower against the Greenback, following the Bank of Japan's monetary policy report. The USD/JPY currency pair rose 15 base points or 0.13% to continue consolidation in the narrow range between the 113.05-113.25 marks.
The Bank of Japan announced its decision to maintain the key interest rate unchanged at a negative 0.1% and keep the target for the ten-year government bond yield at 0%. The Bank postponed its monetary policy changes amid signs of improvements in the country's economy, still anticipating the inflation growth to the elusive 2% target. The following review of the BoJ projections showed that it cut price growth forecasts for 2017, but kept optimistic view for the next years.
Active day of fundamentals
The economic calendar on Wednesday is full of fundamentals events for all major currencies, including the US Dollar and the Pound. The day will start with the UK publishing its Manufacturing PMI at 0930GMT.
Subsequently, the United States is to release two additional sets of data, namely, the ADP Non-Farm Employment Change and ISM Manufacturing PMI for the month of October at 1215GMT and 1400GMT, respectively.
Meanwhile, the Federal Open Market Committee is set to release a statement together with its Federal Funds Rate at 1800GMT.
USD/JPY surges above 113.80
As it was expected, a release of positive consumer sentiment data elevated the pair to the 113.70 mark, which represented an approximate location of different moving averages. During this trading session the exchange rate most probably is going to climb even higher amid the US labour data release and the subsequent Fed meeting.If that is the case, the pair is likely to break through resistance located between the 114.25 and 114.35 marks and try to reach the July 2017 maximum at 114.50.
Generally, this advance is expected to have limited effect, as two days ago the pair made breakout from a long-term rising wedge formation. From this perspective, the Yen is expected to start slowly recovering against the Dollar in the nearest future.
Hourly chart
The US Dollar has been appreciating against the Yen for the second consecutive session. As a result, the pair returned back in the previously-breached ascending channel, thus requiring to adjust its lines slightly southward. The Greenback breached the weekly PP on Wednesday morning.
The closest resistance is set by the weekly R1 and the upper Bollinger band circa 114.40, while support – the monthly PP and the weekly S1 at 113.20. Given this lack of distinctive direction during the past week, intraday trading signals might be more effective at predicting the rate's possible movement in this session.
Daily chart`
SWFX market sentiment remains bearish on Wednesday, as 62% of traders are holding short positions (-5%). In addition, 51% of pending orders are to sell the US Dollar (+1%).
The bearish market sentiment of OANDA traders has significantly decreased, as only 51% of open positions are now short (-6%). Saxo Bank clients are still bearish with 52% short positions (unchanged for the third consecutive session).