Due to comments made by the head of the Bank of Japan, the USD/JPY has declined below all technical support levels that were located from 108.44 to 108.51.
By the middle of Tuesday's London trading the rate had reached the support of the weekly S1 pivot point at 108.22.
Bureau of Labor Statistics released the US Core CPI data, which came out worse-than-expected of 0.1% compared with forecast 0.2%.
According to the official release: "The food index rose 0.3 percent in May after declining in April, with the food index accounting for nearly half of the May seasonally adjusted all items monthly increase. The energy index fell 0.6 percent in May, with the gasoline index falling 0.5 percent and the indexes for electricity and natural gas also declining in May. The index for all items less food and energy increased 0.1 percent for the fourth consecutive month. The indexes for shelter, medical care, airline fares, education, household furnishings and operations, and new vehicles all rose in May. The indexes for used cars and trucks, recreation, and motor vehicle insurance were among those that declined over the month."
FOMC for USD/JPY on Wednesday
On Wednesday, at 18:00 GMT the Federal Reserve is making its FOMC Statement, Federal Funds Rate and Economic Projections. Afterwards, at 18:30 GMT the FOMC Press Conference will take place.
On Thursday, the Bank of Japan will make a Monetary Policy Statement and host a Press Conference. However, the time has not been set. Bank of Japan does not set an exact time for their monetary policy events.
USD/JPY short-term daily review
During the previous trading session, the USD/JPY exchange rate plummeted to the lower boundary of the short-term ascending channel at 108.30. During today's morning, the rate breached the given channel south.Note, that the currency pair is supported by the weekly S1 at the 108.22. Thus, the pair could trade sideways, trying to surpass the given support level.
It is unlikely, that the rate could reverse north, and the US Dollar could exceed the 108.44/108.51 range to the resistance cluster formed by the 55-, 100– and 200-hour SMAs, as well the weekly PP and the Fibo 38.20%.
If the given support does not hold, it is expected, that some downside potential could prevail in the market.
Hourly Chart
On the daily candle chart, a large descending channel pattern can be observed.
Also, as apparent on the chart, the rate is trading sideways around the Fibonacci 38.20% retracement at 108.43. No significant changes are expected in the near future.
Daily chart
Since Monday, 72% of open position volume on the Swiss Exchange Market were long.
Meanwhile, trader set up pending orders had become bearish on Tuesday, as 56% of pending commands in the 100-pip range were set to sell.