On Wednesday morning, the USD/JPY bounced off the support of a 38.20% Fibonacci retracement level at 108.44. The bounce off was part of a consolidation that was occurring in the aftermath of the recent sharp decline.
The pair was expected to surge to the 108.90 level, where it would meet with technical resistance levels that would push it downwards.
Since Monday, December 2, the US Dollar has been depreciating.
Most likely, the Greenback is pressured by various fundamental events. Firstly, on Monday, the World Trade Organization rejected the EU claims for providing subsidies to Airbus. Thus, the US could increase tariffs on more European goods.
Also, on Monday, Cuba took another step to end dual monetary system, and two department stores in Havana began to give change only in pesos.
Moreover, the US President Donald Trump announced tariffs on the US steel and aluminum imports from Brazil and Argentina. Trump claimed that the given countries control devaluation of their currencies, and it was harmful for the US farmers.
According to analysts, the Greenback was also pressured, as the US factory activity has been declining for four months. Also, the US construction spending dropped in October.
On Tuesday December 3, the EU representatives said that the union was ready to reciprocate in case the US would impose tariffs on the French products worth $2.4B.
All these events could negatively affect the demand for the US Dollar, as trade flows could decrease significantly.
Economic Calendar
USD/JPY short-term daily review
Yesterday, the USD/JPY currency pair declined to the support level—the Fibo 38.20% at 108.44. During Wednesday morning, the pair was testing the given support.Hourly Chart
Since Tuesday, 67% of open USD/JPY position volume on the Swiss Foreign Exchange was in short positions.
Meanwhile, trader set up pending orders were to buy. In the 100-pip range 61% of pending orders were to buy and 39% were to sell. Previously, 92% of orders were to buy.