The USD/JPY has confirmed that it is set to surge. Previously, long signals were only present on the daily chart.
Namely, the currency exchange rate broke through the resistance of the dominant descending channel pattern on the hourly chart.
The Bureau of Labor Statistics released US PPI data lower-than-expected of negative 0.2% compared with forecasted 0.01%. Note, that the US Core PPI was released at the same time with the US PPI.
The Bureau of Labor Statistics said in a note, "Lower energy prices sent the producer price index (PPI) down 0.2% in December. Prices for services ticked down 0.1%, but are up 2.8% over the past year—the strongest pace this expansion. The sharp drop in oil prices over the fourth quarter has pulled down energy input costs for a second straight month."
Brexit does not affect USD/JPY
On Wednesday, fundamental events continued in full force. The UK Parliament was set to vote in a confidence vote, which would remove Theresa May from her post.Meanwhile, macro release traders were looking forward to the weekly US Energy Information Administration Crude Oil Inventories at 15:30 GMT. The event causes larger than one percent moves in oil prices each week.
Besides a speech at the G20 Meetings by Bank of Japan's Governor Kuroda at 03:20 GMT, there is nothing on Thursday to watch.
On Friday, two data releases will be covered by Dukascopy Analytics.
At 09:30 GMT the UK Retail Sales will be published. Around 10-40 base point move can be expected during the event.
The biggest event of the will occur at 13:30. The Canadian CPI will be published. On the USD/CAD there are 30 pip moves even when it hits the forecast. When the data is different there have been 40-85 pip moves.
USD/JPY short term daily review
During the previous trading session, the currency exchange rate broke the previously drawn descending medium pattern line at 108.64. On Wednesday, the rate was trading at the 108.56 mark.In regards to the near-term future, it is expected that the rate will break the resistance of the corrected medium pattern line to surge towards the 109.00 level. Moreover, the simple moving averages will support the surge during the day.
On the other hand, the US Dollar could be resisted by the medium pattern line to pass most of the technical indicators to trade at the 108.200 level.
Hourly Chart
On the daily chart the rate has broken free from fluctuating horizontally at the 108.50 level.In general, the pair is on its way to the 200-day SMA at the 111.00 level. The 200-day SMA was being strengthened by the monthly PP.
Daily chart
Since Monday, on the Swiss Foreign Exchange 61% of traders had open long positions of the USD/JPY.
That changed on Wednesday, as traders had become 55% long on USD/JPY.
Meanwhile, trader set up pending orders - stop losses, take profits and position open orders in the 100-pip range were once more neutral.
Short term traders have taken profit from the recent surge. Long term traders are still holding.