The USD/JPY surged on Monday without the support of the 55-hour SMA. On Tuesday morning, the rate reached the resistance of the weekly R1, which managed to hold and cause a retracement back down.
By the middle of the day, the pair had found support in the mentioned 55-hour SMA and appeared to be about to resume its decline.
Economic Calendar
On Wednesday, the US Consumer Price Index data could cause a minor move on USD assets at 13:30 GMT. The USD/JPY has moved from 4.7 to 21.5 pips on the announcement.
Click on the link below to find out more about the data releases of this and other currency exchange rates.
USD/JPY short-term daily review
The USD/JPY managed to pass the 108.55/108.65 resistance zone. On Tuesday morning, the currency exchange rate had reached the resistance of the weekly R1 simple pivot point at 109.23. After making attempts to pass it for six hours straight, the pair declined to the support of the 55-hour simple moving average.In the near term future, the rate was expected to be pushed up by the 55-hour SMA. A potential surge could make another attempt to pass the mentioned pivot point at 109.23. Due to the support of the 55-hour SMA, a second attempt could succeed and the USD/JPY could reach the 109.50 mark.
On the other hand, if the 55-hour SMA fails to provide support, the rate would look for support in the 108.55/108.65 zone and afterwards the 50.00% Fibonacci retracement level at 108.35.
Hourly Chart
On the daily candle chart, the rate could eventually reach the 61.80% Fibonacci retracement level at the 109.83 level. This retracement level stopped the rate's early June's sharp recovery and forced the USD/JPY into continuing its large scale decline.
Daily chart
On Monday, traders were 73% short on USD/JPY. The Swiss Foreign Exchange open positions have been mostly short for more than a week.
On Tuesday, 74% were short.
Meanwhile, trader set up pending orders in the 100-pip range around the rate were 60% to buy.