The USD/JPY surged on Tuesday morning, as it was expected. However, the rate found resistance in 105.75. Afterwards, a decline started, which eventually dropped below all technical support levels.
Moreover, on Wednesday morning, a fundamental drop occurred, which stopped just above the 104.80 mark. A report on the drop is expected to be published in the Expert Commentary section after research is finished.
Economic Calendar
On Thursday, the weekly US Unemployment Claims will be out at 12:30 GMT. The USD/JPY mostly ignores this event, as the rate has moved from 2.9 to 8.5 pips on the announcement, since September 17.
On Friday, the US Markit Flash Services and Manufacturing PMIs could cause a move from 6.2 to 22.8 pips.
Click on the link below to find out more about the data releases.
USD/JPY short-term daily review
The USD/JPY currency pair has tumbled below the psychological level at 105.00.On the one hand, it is likely that some downside potential could prevail in the market. Note that the nearest support level—the weekly S2, is located at the 104.62 mark.
On the other hand, it is likely that a reversal north could occur in the nearest future. In this case the currency pair could rise to the resistance area formed by the 55-, 100– and 200-hour SMAs, as well the weekly and monthly PPs in the 105.34/105.44 range.
Hourly Chart
On the daily candle chart, the previously ignored 55-day SMA provided the rate with resistance at the 105.75 level. The rate began its sharp decline from bouncing off this level.
Daily chart
Since Monday, traders of the Swiss Foreign Exchange were short, as 68% of all open position volume was in short positions.
By the middle of Wednesday's trading, the sentiment was 63% short. Some short positions had taken profits and long positions had been opened in the expectations of a retracement back up.
Meanwhile, trader set up pending orders in the 100-pip range were 74% to buy. Those were assumed to be stop losses and take profits of the still intact short positions.
In addition, a portion of orders are set to open long positions at the start of a retracement.