- 56% of all pending orders are to buy the US Dollar
- 59% of all open positions are short
- The nearest significant resistance is around 113.94
- Downside potential down to 112.01
- Bank Holiday in the US
US manufacturing activity rose more than expected last month, official figures showed on Monday. The Institute for Supply Management reported its Purchasing Managers' Index for the manufacturing sector increased to 57.8 in June, up from 54.9 registered in the preceding month. That marked the strongest reading since August 2014, reflecting improvements in economic conditions both within the country and abroad. The report showed that 15 of 18 sectors tracked by the ISM expanded in June.
Moreover, the New Orders Index jumped to 63.5 last month from 59.5 in May, while production surged to 62.4. Furthermore, the Prices Paid Index fell to this year's lowest level of 55.0, though, the reading above 50 point level still indicated higher prices of raw materials. Overall, the ISM survey suggested that the US economy would show a sharp rebound for the June quarter. After the release, the Atlanta Fed raised its second-quarter GDP growth forecast to a 3.0% annual rate, up from 2.7% expected earlier. In addition, experts suggest that higher overseas demand is likely to support rising confidence in the global economic outlook.
No fundamentals in this session
The market is likely to be calm in this trading session, as no fundamental events are to be released. Banks in the United States are closed due to Independence Day.
USD/JPY breaks intermediate down-trend
USD/JPY was driven by strong upside momentum that resulted in the rate breaking the down-trend on Monday. The rate halted near the 113.40 mark and retraced back to the given line. Near-term technical indicators are bearish, suggesting that the US Dollar may trade lower. A possible stopping point may be the 100-hour SMA at 112.45. In case of a U-turn at this level, this move may confirm the formation of a minor ascending channel. The next support of importance is the 200-hour SMA circa 112.00. The monthly R1 at 113.94 should be the upside limit for today. On the contrary, the given move above the down-trend may likewise be a false breakout, thus requiring to re-adjust the given line. In this scenario, the rate is expected to test the aforementioned 200-hour SMA.Hourly chart
The Greenback faces a significant support cluster formed by the 100-, 55, 200- and 20-hour SMAs and the monthly PP in the 111.00/112.00 area. Meanwhile, gains may be capped near the monthly R1 at 113.94.
Daily chart
SWFX market sentiment is bearish, as 59% of all open positions are short, compared to 61% on Monday. Meanwhile, 56% of pending orders are still to buy the Greenback.
Traders at OANDA remain bullish on the US Dollar, as 55% of open positions are long. Meanwhile, Saxo Bank clients have turned bearish, with 52% of open positions being short.
Spreads (avg, pip) / Trading volume / Volatility
Traders remain bullish on US Dollar
Traders expect that the US Dollar may appreciate up to the 113.83 mark against the Yen in three months' time. 61% of all forecasts fall above the current spot price which is located near the 113.27 mark. The majority of voters expect the US Dollar to cost somewhere between 114.00 and 115.50 yen in early October, with 26% of survey participants choosing this trading range.