- SWFX market sentiment is 68% bearish
- 52% of pending orders in the 100-pip range are to SELL
- Significant resistance is found near 113.85
- Upcoming events: BOJ Governor Kuroda and FOMC member Evans to speak
The Japanese Yen strengthened against the Greenback on the upbeat Japan Eco Watcher's survey. The USD/JPY fell 26 base points or 0.23% to the 113.57 mark, returning to the levels close to Wednesday lows.
The Cabinet Office revealed on Thursday morning that Japanese Eco Watchers' Index, the measure of peoples' evaluation of the country's economy, climbed to the highest level since March 2014. The Economy Watcher's survey showed that the Current Index climbed to 52.2 points in October, surprising forecasts for a drop to 50.8, while the Outlook Index rose notably to the highest level in 46 months of 54.9 in the same period. The economic growth of Japan was expected to cool down in Q3, though experts suggested any weakening to be transitory.
BOJ Governor to speak on Monday
The only person that could shake the market in this session is the Governor of the Bank of Japan Haruhiko Kuroda who is due to speak about monetary policy at the University of Zurich.
Meanwhile, the President of the Federal Reserve Bank of Chicago Charles Evans is to present a speech titled "The future of Odyssean and Delphic guidance" early on Tuesday at 0805GMT.
USD/JPY trades in descending channel
During previous trading session the currency exchange rate expectedly approached and made a rebound from the upper-boundary of the current descending channel. As a result, now the pair is expected to continue moving to the bottom.This direction is also supported by the fact that the 55- and 100-hour SMAs are located above the current market price. Nevertheless, deprecation of the Yen might be hampered if bears fail to push the pair through the monthly PP at 113.25.
In addition to that, there is a need to take into account existence of a junior ascending channel that formed as a part of the larger pattern and might also obstruct the further plunge.
Finally, some volatility in the markets might also be caused by a speech that will be delivered by BOJ Governor Kuroda at the University of Zurich.
Hourly chart
After testing the 114.20 mark last week, USD/JPY began to trade lower. On Monday morning, the pair was located slightly above the monthly PP at 113.25. This mark is likely to provide strong support, as the Greenback failed to move past it both on Thursday and Friday.
However, the overall direction this week is expected to be downwards.
Daily chart`
SWFX market sentiment has remained at the same level for the second consecutive session, as 68% of traders are holding short positions. Meanwhile, pending orders are at equilibrium.
The bearish market sentiment of OANDA traders is bearish in this session, as 56% of open positions are short (unchanged from Friday). Meanwhile, the number of open positions of Saxo Bank clients is 54% long (+2%).