As expected, the USD/JPY tested the 111.50 level for a third time and failed at passing it. On Wednesday, another attempt was expected.
In general, the rate was set to be pushed higher by the support of the 55 and 100-hour SMAs and the lower trend line of a channel up pattern.
Economic CalendarThe week will end with the US Final GDP data release on Thursday at 12:30 GMT. This event also us unlikely to impact the USD/JPY, as since December 2018 it had moved the rate from 5.5 to 8.9 pips.
Meanwhile, next week's data is available. Click on the link below to see the historical data tables with the reactions to various events.
USD/JPY short-term daily review
From a theoretical perspective, it is likely that the exchange rate could trade upwards along the lower boundary of the medium-term ascending channel. In this case the rate could exceed the 112.00 level.If the given support holds, it is likely that some upside potential could prevail in the market, and the exchange rate could exceed the 111.50 level.
However, if the currency pair fails to surpass the 111.50 level, it is likely that a breakout south from the given channel could occur. In this case the pair could gain support from the Fibo 61.80% at 110.72.
Hourly Chart
On the daily candle chart, the rate continues to recover, as it approaches the resistance of the 112.00 level.
Daily chart
Read More: Technical Analysis
Traders continue to short the pair
On Monday, 56% of open USD/JPY position volume on the Swiss Foreign Exchange was in long positions.
By the middle of Tuesday's GMT trading hours, the sentiment was 59% short, and on Wednesday, 64% were short.
In general, USD/JPY were expecting the rate to decline instead of surging above the 111.50 mark.