Global macro overview for 01/05/2017:
A monthly gauge of manufacturing activity in Japan in a form of PMI Manufacturing data was just a tick worse than expected. Market participants expected unchanged PMI data at the level of 52.8 points, but the number came at 52.7, so it was basically unchanged for the month. Any PMI above 50 signals expansion, while readings below that level point to contraction. April marked the eighth successive month when Japan's manufacturing PMI was above 50. In conclusion, the manufacturing sector of the Japanese economy is still holding the ground and might even provide another set of good and stable outcome in the future as the Bank of Japan had recently improved its 2017-18 outlook from 1.5% to 1.6% (in line with economists and global investors expectations as well).
Let's now take a look at the USD/JPY technical picture on the H4 timeframe. Bulls are trying to break above the technical resistance at the level of 111.80 which is 50%Fibo as well. Importantly, the market conditions remain overbought and there is a visible bearish divergence between the price and the momentum oscillator. The next support is seen at 110.85 and a break below this level will open the road towards the next important support at 110.54.
