The decline of the USD/JPY stopped on Wednesday at 104.35. Afterwards, a recovery began, which by the middle of Thursday's European trading had reached the 104.80 mark.
US Dollar Drops on Stimulus Talks
From Tuesday to Wednesday, the US Dollar depreciated actively against the Japanese Yen. The USD/JPY currency pair lost 137 pips or 1.30%.
It is likely that the Greenback loses value as investors became cautiously optimistic that an agreement on the US fiscal stimulus package could be reached ahead of the US election on November 3.
Additionally, people became more helpful that a coronavirus vaccine will be ready by the end of 2020.
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
Yesterday, the USD/JPY currency pair tumbled to the 104.40 level. During Thursday morning, the pair was trading at 104.75.It is likely that the exchange rate could gain support from the weekly S2 at 104.62 and trade upwards in the short term. Meanwhile, it is unlikely that the rate could exceed the 55-, 100– and 200-hour SMAs in the 105.30 area.
On the other hand, the currency pair could trade sideways between the predetermined support level, as well the resistance level formed by the weekly S1 and the Fibo 23.60% at 105.03.
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. On Thursday, just 56% of volume was short.
On Wednesday, trader set up pending orders in the 100-pip range were 74% to buy. On Thursday, 54% of orders were to buy.
Traders have been taking profits just after the drop and during the retracement up. Moreover, it is highly likely that long positions have been opened to profit from the retracement.