USD/JPY has been experiencing a sharp drop since the early hours of Friday's European trading session.
In the meantime, the Prime Minister of Japan Shinzo Abe has resigned. It indicates that the recent sharp moves are purely fundamental.
Economic Calendar
The first week of the month is upcoming. It is set to reveal monthly data sets, which are expected to cause notable currency rate adjustments.
On Tuesday, at 14:00 GMT the US ISM Manufacturing PMI is set to be published.
At 12:15 on Wednesday, the ADP Non-Farm Payrolls could cause a move from 5.5 to 17.7 pips. Dukascopy Analytics usually ignore this event because prior to August the EUR/USD move range was 5.5 to 8.4 pips. The early August release caused a 17.7 pip move.
On Thursday, watch the economic calendar two times during the day. At 12:30 the weekly US Unemployment Claims are set to be released. At 14:00 GMT, the US ISM Non-Manufacturing PMI results will be published.
On Friday, both Canada and the US are set to release their monthly employment data at 12:30 GMT. Depending on the currencies that one trades, one needs to look at different data tables, as reactions to the event vary.
Click on the link below to see the historical reaction tables.
USD/JPY short-term daily review
As the announcement of the Japanese Prime Minister Shinzo Abe resigning was made, the USD/JPY started to trade with high volatility. However, it has continued to respect technical levels. Namely, the support of a channel up pattern held and caused a surge.On Friday, the rate had tested the resistance of a 38.20% Fibonacci retracement level at 106.86 and failed to pass it. The event was followed by a decline to the 106.00 level.
In the case of the decline continuing, the pair would look for support in the 200-hour SMA at 105.95 and the weekly simple pivot point at 108.88 before reaching for the lower trend line of the mentioned channel up pattern.
Meanwhile, note that the recent highly volatile moves are fundamental. The talks about a new Japanese Prime Minister are bound to cause moves that ignore technical levels.
Hourly Chart
On the daily candle chart, the pair bounced off the resistance of the 55 and 100-day simple moving averages at 106.65 and 107.00.
Daily chart
On Friday, traders of the Swiss Foreign Exchange were short, as 62% of all open position volume was in short positions.
Meanwhile, trader set up pending orders in the 100-pip range were 55% to buy.
Previously, the orders were 54% to sell.