The rate ended trading sideways on Tuesday and slightly surged until it was squeezed in between the 55 and 100-hour simple moving averages at 109.03 and 109.18.
In general, any squeeze ends with a break out. In this case it could result in a surge to 109.55 or a drop to 108.90.
On Wednesday, the US Federal Funds Rate is scheduled to be published at 19:00 GMT. The event has caused moves from 11.2 to 37.2 pips.
Note that the largest moves occurred during rate cuts. This time, no rate cut is expected. Due to that reason a move of around 10 pips can be expected.
On Thursday, the US Advance GDP publication at 13:30 GMT is set to occur. The event has caused moves from 11.1 to 31.2 pips since October 2018.
The week's event historical data tables have been published. Click on the link below to read the article.
Read More: 27.01-31.01 Event Historical Reactions
USD/JPY short-term daily review
Yesterday, the USD/JPY currency pair reversed north from the lower boundary of the rising wedge pattern (4H time-frame chart). During Wednesday morning, the pair was testing the 100-hour SMA at 109.20.From a theoretical perspective, it is likely that some upside potential could prevail in the market. In this case the exchange rate could target the monthly R1 located at 109.47.
However, if the given moving average holds, it is likely that the currency pair could re-test the lower pattern line. It is unlikely that a breakout south could occur due to the support formed by the weekly S1 and the monthly PP at 108.90.
Hourly Chart
On the daily candle chart, the pair appears to have found support in the 100-day simple moving average, which on Wednesday was located at 108.71.
Daily chart
Read More: Technical Analysis
Traders are long on USD/JPY
On Wednesday, 74% of open USD/JPY position volume on the Swiss Foreign Exchange was in long positions.
Meanwhile, in the 100-pip range 60% of pending orders were to sell and 40% were to buy.