The decline of the USD/JPY passed the support of the 55-hour simple moving average and touched the 108.50 mark. By the middle of the day's GMT trading hours, the pair had rebounded from this level and reached the 109.00 mark.
In the meantime, the rate was expected to get squeezed in between the 55 and 100-hour simple moving averages.
Economic CalendarAs it occurred during the last week, due to the fundamental changes in the markets, Dukascopy Analytics suggest to note the scheduled macroeconomic events, but avoid using historical data for guidance.
Namely, the whole world changes the money supply by announcing monetary stimulus and government expense increases. In other words, the central banks are creating more money and giving it to governments to stop the effects of the coronavirus. In effect, each announcement causes a fall of the currency that it affects.
However, click on the link and take a look at the last reactions to various events in March. Even already ignored events like Producers Price Index and Consumer Price Index caused notable reactions above 20 pips. Previously, the release of these data sets did not cause an increase of exchange rate volatility.
USD/JPY short-term daily review
On Wednesday, the USD/JPY was testing the resistance of the 55-hour simple moving average and the 109.00 psychological level.In the meantime, the rate previously revealed that the 108.50 can support the pair. In addition, the 100-hour SMA was approaching the rate from below.
In the near term future, the rate was expected to get squeezed in between the 55 and 100-hour simple moving averages. A squeeze should result in a break out. If the rate breaks out to the upside, it would test the weekly R1 at 109.24. On the other hand, a break out down would test the 50.00% Fibo at 108.35.
Hourly Chart
On the daily candle chart, on Monday, the rate broke the technical resistance of the 55 and 100-day simple moving averages near 109.00.
These two SMAs together with the 200-day SMA were set to provide support.
Daily chart
Read More: Technical Analysis
Traders are short on USD/JPY
On Wednesday, 64% of trader open position volume on the Swiss Foreign Exchange was in short positions. The sentiment had declined to 61% short on Tuesday.
During the previous week, traders were also short with more than 60% of open position volume being bearish.