On Wednesday, the USD/JPY pair was consolidating its previous gains by declining.
The decline was expected to continue until the rate would reach the lower trend line of an ascending channel pattern or the FOMC Meeting Minutes announcement at 18:00 GMT.
During previous Monday's trading session, the Japanese Yen appreciated 54 pips or 0.50% against the US Dollar. Note, that the US Dollar also depreciated significantly against gold.
The reason for the advance was the announcement from the Chinese government that it would impose tariffs on $60B of the US goods from June 1.
Most likely, the demand for the Japanese Yen and for gold has increased as for the safe-haven assets.
US FOMC in focus for USD/JPY
The week will end with the US Durable Goods Orders and Core Durable Goods Orders on Friday at 12:30 GMT. This event has been rather non-eventful in the past half a year, as it has caused moves of only five to 18 pips.
USD/JPY short-term daily review
As it was expected, the USD/JPY had become overbought due to the jump that occurred on Tuesday. This resulted in a decline, which by the middle of London's Wednesday session had reached 110.40.The rate was expected to look for support in the 55-hour simple moving average and the lower trend line of an ascending channel pattern near 110.30.
If the pair finds support in this level, it should test the previously broken resistance levels near 110.50. At that level the weekly R1 and a monthly pivot point were located at.
On the other hand, the rate might break the support of the two mentioned levels and decline down to the 100-hour SMA, which was located just above 110.00.
Meanwhile, note that at 18:00 GMT the FOMC Meeting Minutes will impact all USD pairs. Watch the preview on Dukascopy Webinars.
Hourly Chart
Previously it was constantly repeated that the rate is oversold, as the daily candle chart's simple moving averages were located far above the currency exchange rate.On Tuesday, the rate had reached and pierced one of the daily simple moving averages. Namely, the 100-day SMA was passed at the 110.47 level.
The rate no longer can be considered oversold on the daily chart.
Daily chart
Since the middle of last week the Swiss Foreign Exchange sentiment was mostly bullish. As more than 60% of all open position volume was in long positions.
On Wednesday, the situation changed. 57% of open position volume was in long positions.
Some traders had taken profit during the retracement back down.
Meanwhile, trader set up pending orders were mostly bullish, as 56% of pending commands in the 100-pip range were set to buy.