The USD/JPY continues to decline, as the rate touched the levels just above the 107.00 level on Friday morning.
However, a surge began, as soon as the Japanese government announced that it will intervene. In general, the Japanese are about to manipulate their currency to protect their exports and financial sector.
The decline was caused by the US Federal Reserve announcing that it will do monetary easing. Namely, the supply of the USD will increase, which was the cause for the currently occurring fall.
The Federal Reserve released the FOMC Statement, where the US policymakers provided in-depth insights into the economic and financial conditions that influenced their vote on maintaining the Federal Funds Rate unchanged. Note, that FOMC Economic Projections were released at the same time.
The Fed suggested that it would cut the interest rate in 2020. The median target for the federal funds rate remains 2.4% for 2019. Note, that the Federal Reserve has not cut the rate since the financial crisis. However, recent employment data set and inflation data releases have led analysts to forecast cut rates in the future.
No more events this week
Notable events for the USD/JPY have ended this week. The historical data for the next week's scheduled events is available.
The data that is noted by the financial markets as important starts on Wednesday. On that day, the US Durable Goods Orders and Core Durable Goods Orders will be published at 12:30 GMT.
This event since February has caused moves from 3.9 to 16.5 pips. Moreover, the 16.5 pip was an anomaly, as the rest of the events have caused from 3.9 to 7.6 pips.
On Thursday, the US Final GDP will be published at 12:30 GMT. This is the least important GDP of the three quarterly publications of the US GDP. Since March 2018 this event has caused moves from 6.6 pips to 16.5 pips.
The full review of all of the notable events of next week will be conducted in a video and published on our Dukascopy Webinars YouTube channel on Monday.
USD/JPY short-term daily review
Yesterday, the USD/JPY currency pair declined to the support level—the monthly S1 at 107.14. During Friday's morning, the pair reversed north.Note, that the exchange rate has to surpass the resistance level formed by the weekly S3 at the 107.58 mark to maintain its growth. If the given resistance holds, it is expected, that the rate could trade sideways.
If the given resistance does not hold, it is expected, that the pair could reach the 107.87 mark, where the resistance level formed by the 55-hour SMA and the weekly S2 is located.
It is unlikely, that bears could prevail in the market, and the rate could drop lower than the 107.02 mark due to the support of the Fibo 23.60%.
Hourly Chart
On the daily candle chart, the drops were still in the borders of the long term descending channel pattern.
Moreover, the pair still has room for a decline, as the lower trend line of the pattern was located just above the 106.50 level.
Daily chart
Since the middle of Thursday's London trading session on the Swiss Foreign Exchange 74% of open USD/JPY position volume was in long positions.
Despite the drop, traders have stuck to being long on the pair. Moreover, if these position have been open before 12:00 GMT on Thursday, at the time of writing they are in the red.
Meanwhile, trader set up pending orders were mostly bearish, as 55% of pending commands in the 100-pip range were set to sell. Previously, 62% of orders were to sell, and before that 73%.