The decline of the USD/JPY has continued. On Thursday, the pair started to test the support of a 38.20% Fibonacci retracement level at the 106.86 level.
In the meantime, take into account that the FOMC announcements on Wednesday did not cause a large increase of volatility, as it did on the EUR/USD charts.
Economic Calendar
Economic calendars show the US PPI and Unemployment Claims on Thursday. The last PPI release caused a move below normal volatility.
USD/JPY short-term daily review
On Wednesday, the USD/JPY currency pair declined to the Fibo 38.20% at 106.86. During today's morning, the pair was testing the given level.
Given that the exchange rate is pressured by the 55-hour SMA near 107.50, it is likely that some downside potential could prevail in the market. Note that the rate could gain support from the weekly S2 and the monthly S1 at 106.50.
However, if the Fibo 38.20% holds, it is likely that the US Dollar could trade sideways against the Japanese Yen within the following trading session.
Also, it is unlikely that bulls could prevail in the market, and the pair could exceed the 108.35 mark due to the resistance formed by the 100– and 200-hour SMAs, as well the Fibo 50.00%.
On the daily candle chart, it was previously noted that the rate is overbought, as it had moved too far away from the simple daily moving averages. On Monday and on Tuesday, the rate had returned to the SMAs.
Namely, on Monday, the 100 and 200-day SMAs were reached on Monday. On Tuesday, they were passed and the 55-day SMA was reached.
On Wednesday, the support of the 55-day SMA was already passed. The SMAs could even provide resistance to any rate's recovery.
Daily chart
Given that the exchange rate is pressured by the 55-hour SMA near 107.50, it is likely that some downside potential could prevail in the market. Note that the rate could gain support from the weekly S2 and the monthly S1 at 106.50.
However, if the Fibo 38.20% holds, it is likely that the US Dollar could trade sideways against the Japanese Yen within the following trading session.
Also, it is unlikely that bulls could prevail in the market, and the pair could exceed the 108.35 mark due to the resistance formed by the 100– and 200-hour SMAs, as well the Fibo 50.00%.
Hourly Chart
On the daily candle chart, it was previously noted that the rate is overbought, as it had moved too far away from the simple daily moving averages. On Monday and on Tuesday, the rate had returned to the SMAs.
Namely, on Monday, the 100 and 200-day SMAs were reached on Monday. On Tuesday, they were passed and the 55-day SMA was reached.
On Wednesday, the support of the 55-day SMA was already passed. The SMAs could even provide resistance to any rate's recovery.
Daily chart
Read More: Technical Analysis
Traders short the pair
On Thursday, on the Swiss Foreign Exchange 62% of open position volume was in short position.
The sentiment had been near this number throughout the week.
Meanwhile, 62% of set up pending trade orders in a 100 pip range around the exchange rate were set to buy.
Previously, 67% of orders were to buy.