As forecast, the USD/JPY declined on Tuesday. During the morning hours of the day, the pair bounced off the 107.30 level. By doing that, the rate revealed a channel down pattern.
In regards to the future, on Wednesday the rate had bounced off the upper trend line of the pattern and passed the support of hourly simple moving averages. It signalled that it would decline.
Economic CalendarOn Thursday, at 12:30 GMT, the US Unemployment Claims are scheduled to be released. Most likely, the event would reveal another major decline in US employment.
Also on Thursday, at 13:45 US Manufacturing PMI could cause a move, as in February and March it created large moves.
Last but not least, a notable reaction of above then pips could be created by the US Durable Goods orders on Friday at 12:30 GMT.
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 bounced off the upper trend line and passed the hourly simple moving averages near 107.70.From a theoretical perspective, it is likely that some downside potential could prevail in the market, and the exchange rate could re-test the lower channel line near 107.25.
If the given channel holds, it is likely that a reversal north could follow. Otherwise, it is likely that the currency pair could target the psychological level at 107.00.
Hourly Chart
On the daily candle chart, the rate faces the resistance of the daily simple moving averages. The SMAs were located from 108.30 to 108.84 levels.
Daily chart
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Short sentiment decreases
On Tuesday, 59% of trader open position volume on the Swiss Foreign Exchange was in short positions.
By the middle of Wednesday's GMT trading hours, the sentiment was 54% short.
It could be assumed that some traders closed their short positions during the decline to the 107.30 mark.