The lower than expected US inflation caused a drop of the US Dollar. The USD/JPY plummeted on the news down to the 135.00 mark. Moreover, after retracing and encountering resistance in the 135.60/135.75 zone the pair resumed its decline. By mid-Wednesday, the rate had touched the 134.50 level and the weekly S1 simple pivot point.
Economic Calendar
On Wednesday, the top event of them all will take place. At 19:00 GMT, the US Federal Reserve will release its Federal Open Market Committee Statement and Economic Projections. The central bank is expected to hike its base interest rate from 4.00% up to 4.50%.
On Thursday, at 13:30 GMT, the US Retails Sales data and Empire State Manufacturing Index might cause an adjustment in the value of the US Dollar.
The week will end with the publication of Markit Services and Manufacturing sector Purchasing Managers Index survey data at 14:45 GMT.
Hourly Chart
In regards to near future, fundamentals continue to dictate the moves. At 19:00 GMT, the US Federal Reserve is set to announce its interest rate hike. The markets expect a 0.50% interest increase. Afterwards, at 19:30 GMT, the head of the Federal Reserve Jerome Powell will host a press conference, during which the future plans of the US Dollar's policymakers will be revealed.
USD/JPY daily chart's review
On the daily candle chart, note that the 200-day simple moving average at 137.40. The SMA is acting as resistance and appears to have forced the pair down.Daily chart
Prior to the CPI, on the Swiss Foreign Exchange, traders were 60% short, as that amount of open position volume was in short positions.
Meanwhile, trader set up pending orders in the 100-pip range around the rate were 56% to buy the USD against the JPY.
Prior to the Fed, the sentiment was 59% short and pending orders were 50% to buy and 50% to sell.