- SWFX market sentiment is 56% bearish (+1%)
- 59% of pending orders in the 100-pip range are to SELL
- Strong support is located near the 111.80 mark
- Upcoming events: US Unemployment Claims, US Core PCE Price Index m/m, US Personal Spending m/m, US Chicago PMI, FOMC Members Quarles and Kaplan to speak
The Greenback was slightly changed against the Japanese Yen, following the preliminary data release on the US economic growth. The USD/JPY exchange rate fell 3 base points to continue fluctuating at a stronger level of 111.95, targeting the 112.0 area.
The US economy expanded at the fastest pace in three years, as businesses invested more in equipment and inventories, offsetting slackening in inflation. The Commerce Department stated in its preliminary report that the US gross domestic product rose at a 3.3% yearly pace in the September quarter. Donald Trump wants diminished taxes to lift yearly GDP growth to 3% on a regular basis. Though, fiscal stimulus is likely to come only when the economy is at full employment.
US Unemployment Claims
The United States is to release a set of fundamentals in this session, namely, the weekly Unemployment Claims and the Core CPE Price Index and Personal Spending for the month of October at 1330GMT. In addition, ISM-Chicago Inc will publish its PMI at 1445GMT.
The Federal Reserve Governor Randal Quarles is due to speak about payment systems at the Financial Stability and Fintech Conference at 1730GMT, while the President of the Federal Bank of Dallas is to participate in a panel discussion at the Real Estate Council at 1800GMT.
USD/JPY breaks two-week long channel down
Even though there were attempts to push the pair back to the 55- and 100-hour SMAs, anticipation of the upcoming US GDP data release and the event itself inched the buck higher. Without this fundamental background the pair would unlikely to bypass the 38.2% Fibonacci retracement level at 111.65 and the monthly S1 at 112.05.However, the further surge seems unlikely, as yesterday's sharp advance led to transformation of new junior ascending channel into the rising wedge formation. In support of this assumption, there is an alleged resistance area between the 112.30 and 112.35 marks that matches with the breaking point of the pattern.
In case this assumption is incorrect, a combination of the weekly R1 and the 50% Fibonacci retracement level near 112.45 should temporarily halt the buck from soaring higher.
Hourly chart
The US Dollar was trading below 111.60 during the first half of Wednesday. However, the US Preliminary GDP mid-session added the necessary momentum to push above the 100- and 200-day SMAs and the weekly PP. The same bullish sentiment prevailed on Thursday morning, as well, thus resulting in a breakout of the monthly S1 at 112.05.
The upside is limited by the weekly R1 and the 55-day SMA circa 112.60. It is unlikely that this area is breached today. The base scenario favours the rate remaining between the monthly S1 and the weekly R1.
Daily chart
The bearish SWFX sentiment has increased by one percentage point on Thursday, as 56% of open positions are short (+1%). Meanwhile, 61% of pending orders are to buy the Greenback (+1%).
OANDA traders are bullish on the pair, with 60% of open positions being long (+4%). In addition, the number of open positions of Saxo Bank clients is 52% long (-4%).