USD/JPY traders go short

Note: This section contains information in English only.
Source: Dukascopy Bank SA
The decline of the USD/JPY appears to have found support in the late June low level zone. Namely, the 160.25/160.30 range acted as support on Monday. However, by mid-day the rate had encountered resistance in a trend line that connects the pair's recent lower high levels. In general, the pair could get squeezed in.

In the meantime, it was spotted that Dukascopy traders have gone short on the pair after beeing mostly long since the start of June.

Economic Calendar



This week, the markets could move due to the testimony of the US Federal Reserve Chairman Jerome Powell's testimony before the US Congress. New information could move the US Dollar.

On Thursday, a data release could move the financial markets. The United States Bureau of Labor Statistics is set to release the US Consumer Price Index data sets at 12:30 GMT. Higher than expected inflation would indicate that the US Fed cannot cut interest rates. Lower inflation would signal that rate cuts are possible.

On Friday, more inflation data will be published. The US Producer Price Index data sets will reveal how prices have changed at the manufacturing level. Due to this release coming after the CPI, it is highly likely that the reaction will be minor.

USD/JPY hourly chart analysis

A break out to the downside, below the 160.25 level, could result in the pair almost immediately looking for support in the 160.00 mark and the weekly S1 simple pivot point at 160.05. Below these levels, the 159.50 and the weekly S2 at 159.38 might slow down a decline.

In the case of a break out to the upside, the rate would have to get through the combined resistance of the 50, 100 and 200-hour simple moving averages, the weekly simple pivot point all near the 161.00 mark. If this level fails, the 161.50 level and the weekly R1 at 161.67 might slow down a surge, before the 162.00 is reached once again.

Hourly Chart

USD/JPY daily chart's review

On the daily candle chart, we have marked the prior notable high level zones that could turn into support in the event of a decline. There is support near 160.00 and 158.00.

In addition, note that the 50-day simple moving average is approaching the 158.00 level. The 50-day SMA has pushed the pair up since early May.

In regards to resistance, the pair could continue to encounter resistance in round level like the 162.00, 164.00, 165.00 and 166.00.

Daily chart



Traders are short

Dukascopy traders had profited from the surge, as since the start of June more than 70% were long on the pair. During the same period, pending orders in the 100-pip range around the pair were more than 80% to buy.

On July 1, we observed some profit taking, as 65% of volume was long and pending orders were 72% to buy.

By July 4, positions were 60% long and orders were 60% to sell.

In general, traders appear to have their trailing or close by stop loss triggered or even taken profits due their triggers. Moreover, additional long positions might be closed and short positions opened.

On July 8, traders had closed their long positions and become bearish, as 66% of volume was short. Meanwhile, pending orders were 52% to sell.

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