The support of the 55-hour SMA failed to push the rate up. Instead, as the technical support level failed, the rate began a sharp decline, which reached the support levels near 103.50.
The rate bounced off the support levels and by the middle of Wednesday's European trading hours, the rate had recovered to the 104.00 level.
Economic Calendar
During the week, there will be minor data sets published, which could cause initial reactions of up to 20 pips. Traders with close by tight stop losses should take into account the times of the macroeconomic data releases.
On Wednesday, the United States Bureau of Labor Statistics is set to publish the Consumer Price Index and Core Price Index at 13:30 GMT.
Afterwards, at 13:30 GMT, expect the weekly US Unemployment Claims. Despite the attention this release gets, we do not recommend monitoring it closely. The USD/JPY has moved only 3.6 to 8.1 pips on the release since December 10.
The week will end with the publication of the US Retail Sales and US Core Retail Sales at 13:30 GMT. In November and December, these data sets caused an increase of volatility above the average.
Click on the link below to find out more about the data releases of this and other currency exchange rates.
USD/JPY short-term daily review
It is likely that the exchange rate could be pressured by the 55– and 100-hour SMAs in the 104.00 area. Thus, some downside potential could prevail in the market, and the rate could decline to the weekly S1 at 103.03.However, if the predetermined support level holds, the US Dollar could trade sideways against the Japanese Yen within the following trading session.
Hourly Chart
On the daily candle chart, the rate pierced the resistance of the 55-day simple moving average just above the 104.00 mark. The next resistance on the chart was the upper trend line of the channel down pattern, which has guided the rate since June.
In addition, take into account the 100-day simple moving average, the November high levels and the weekly R1 simple moving average. These levels are located from 104.53 to 104.70.
Daily chart
On Wednesday, on the Swiss Foreign Exchange around 54% of volume was in long positions.
At mid-day on Tuesday, the sentiment was 64% long.
Meanwhile, trader set up pending orders in the 100-pip range around the rate were 54% to sell.
Previously, the orders were 69% to sell. They were executed as traders closed their long positions during the rate's drop.