Since the jump the rate was declining and by the middle of Wednesday's trading session the rate was about to reach technical support levels at 106.00.
US Retail Sales in focus
On Thursday, the US Retail Sales are expected to cause a move at 12:30 GMT. Note that this release will consist of two numbers. Namely, the US Retail Sales and US Core Retail Sales.
The Core Retail Sales do not include auto sales. People buy cars on debt, paying the same amount of money each month and continue to buy the needed transportation no matter what. The elimination of auto sales improves retail sales as a measure of economic growth.
The data release since April has caused moves from 12.2 to 23.7 base points.
USD/JPY short-term daily review
Yesterday, the USD/JPY currency pair traded sideways at the 105.70 level. During today's morning, the pair tested the resistance level—the monthly S2 at 106.54.It is likely, that the exchange rate could trade sideways between the given resistance and the support cluster formed by the 55-, 100– and 200-hour SMAs, as well the weekly PP and the monthly S3 in the 105.79/106.03 range.
However, if the given support cluster does not hold, it is expected, that bears could prevail in the market in the nearest future. A possible downside target is the psychological level at 105.20.
Hourly Chart
On the daily candle chart, it can be observed that the surge of the currency exchange rate was stopped by a 23.60% Fibonacci retracement level at the 106.98 level.
Moreover, it appears that the large scale descending channel was only pierced and not broken.
Daily chart
Read More: Technical Analysis
Traders remain long
Since Wednesday, 73% of USD/JPY open position volume on the Swiss Foreign Exchange was in long positions.
Meanwhile, trader set up pending orders were bullish, as in the 100-pip range 69% of pending orders were set to buy and 31% were to sell.