- SWFX market sentiment is 61% bearish (-2%)
- 61% of pending orders in the 100-pip range are to SELL the Greenback
- Notable resistance around 111.60
- Upcoming events: US PPI m/m, US Core PPI m/m, US Unemployment Claims, FOMC Member Dudley to speak, Japan's Bank Lending y/y, Japan's Current Account
The Greenback feel sharply against the Japanese Yen on the disappointing labour market data. . The USD/JPY currency pair dropped 23 base points or 0.20% to the 113.07 level.
The US employment growth weakened significantly in December due to a decrease in retail jobs, while a surge in monthly pay gains indicated the labour market strength, which could enable the Federal Reserve to hike interest rates in Spring. The Labour Department stated that the non-farm payrolls increased 148K in the reported month, following an upwardly revised 252K in November. Job growth is anticipated to moderate as the labour market remains close to full employment, though with some chances to get a boost from $1.5T tax cuts package.
US PPI
The US Bureau of Statistics is set to publish the country's Producer Price Index and the Core PPI for December at 1330GMT. The weekly Unemployment Claims are also released at the same time. In addition, the President of the Federal Reserve Bank of New York William Dudley who is due to speak about the economic outlook at the Securities Industry and Financial Markets Association at 2030GMT.
The day will end with two sets of fundamentals from Japan, namely the BoJ's Bank Lending and the country's Current Account published at 2350GMT.
USD/JPY drops to 111.30
Due to fears of a large reduction in foreign Dollar asset purchases, the buck fell by 0.86% against the Yen just in couple of hours. The plunge was stopped only after the exchange rate reached support area located around the weekly S2 and the monthly S1.Accordingly, today bulls are expected to try to restore lost positions. Most probably the surge will last until the pair reaches strong support-turned-resistance at the 112.10 level, which is additionally backed up by the 55-hour SMA. In case of better than expected US PPI data release, the soar might extend to the 112.60 mark, which represents location of the monthly PP together with the 100- and 200-hour SMAs.
From the opposite side, the new decline is likely to be halted by the 38.2% Fibonacci retracement level at 111.17 the three-month low at 110.84.
Hourly chart
The US Dollar plunged 1.09% against the Yen on Wednesday as a result of which the rate breached the strong support of the 200-day SMA, the weekly S2 and the monthly S1 near 111.60.
As apparent on the chart, bulls have been trying to regain some of their lost positions early on Thursday; however, the 200-day SMA at 111.70 could provide some notable resistance. If this level is breached, a possible upside target for today might be the 100-day SMA and the weekly S1 at 112.30.
Daily chart
The bearish SWFX market sentiment has slightly weakened today with 61% short positions (-2%). Meanwhile, 54% of pending orders are to buy the Greenback (-2%).
The market sentiment of OANDA traders is increasingly bullish with 56% long positions (+6%). Saxo Bank clients are also bullish, as 55% of open positions are long (+2%).