The decline of the USD/JPY reached below the 107.50 level on Monday morning. Afterwards, a recovery began, which was expected to end during the second part of Monday's GMT trading hours.
Namely, the rate was about to face the resistance of a channel down pattern and the 55-hour simple moving average.
Economic CalendarDuring week, data can be ignored, as the fundamental background has changed in a way that historical data does not matter.
However, take a look at the list of previously notable events, as the markets will be looking at them to understand the impact of the virus.
USD/JPY short-term daily review
On Monday, analysts spotted a channel down pattern, which has guided the rate's decline since March 25. In theory, the upper trend line of this pattern should provide resistance. In the meantime, the rate was being approached by the 55-hour simple moving average.In theory, the rate should bounce off the resistance of the trend line and resume its decline. In the case of a decline the currency exchange rate could reach for the technical support levels near 106.70. However, the 107.00 round exchange level could provide psychological support, as the USD/JPY respects round price levels.
On the other hand, the rate could pass the resistance of the trend line and the 55-hour SMA. In such a scenario the pair would next aim at the resistance cluster that is located from 109.00 to 109.34.
Hourly Chart
On the daily candle chart, the rate has passed the support of the 55, 100 and 200-day simple moving averages. Moreover, on Monday, the 200-day SMA began to provide resistance
In regards to the future, the SMAs were expected to push the rate down.
Daily chart
Read More: Technical Analysis
Short sentiment decreases
Since Thursday, 68% of open USD/JPY position volume on the Swiss Foreign Exchange was in short positions.
On Monday, the sentiment declined to 62% short. Some traders had taken profits from the recent decline.