As it was speculated on Tuesday, the 107.00 level provided the USD/JPY exchange rate with the needed support for a rebound.
By the middle of Wednesday's GMT trading hours, the rate's recovery had reached the combined resistance of the 55-hour SMA and a weekly S2 simple pivot point.
Economic CalendarDue to the fundamental changes in the markets, Dukascopy Analytics suggests 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.
During the week, data is bound to reveal, how the coronavirus has continued to impact the US economy.
On Wednesday, the US Retail Sales data sets are bound to be published at 12:30 GMT. Most likely they will surprise the markets with the reveal of a drop in US consumption.
On Thursday, all attention is expected to be set on the weekly US Unemployment Claims. During the last weeks this announcement has been revealing shocking data, as during the two week period almost ten million US workers claimed unemployment benefits. The unemployment claims were previously ignored as they had stopped causing market reactions.
USD/JPY short-term daily review
On Tuesday, the USD/JPY currency pair revealed a short-term descending channel. During today's morning, the pair reversed north from the lower channel line.It is likely that the exchange rate could remain under pressure of the 55-hour SMA near 107.50 and trade downwards in the short term. In this case the rate could gain support from the Fibo 38.20% and the weekly S3 at 106.86.
If the given support level holds, it is likely that the US Dollar could trade sideways against the Japanese Yen within the following trading session in the short run.
Hourly Chart
On the daily candle chart, the rate has bounced off the resistance of the 55, 100 and 200-day simple moving averages, which are located from 108.00 to 109.00.
Daily chart
Read More: Technical Analysis
Short sentiment declines below 60%
On Tuesday, 64% of trader open position volume was bearish.
On Wednesday, 58% of trader open position volume on the Swiss Foreign Exchange was in short positions.
Open position volume had been above 60% short since the start of April.