The decline of the USD/JPY stopped at the 109.27 level and began a retracement back up. The retracement reached the 55-hour simple moving average on Friday, which signaled that the rate is no longer oversold.
In the meantime, Dukascopy Analytics spotted a channel down pattern, which has guided the rate since the middle of January. Namely, it starts with the sideways trading prior to the Bank of Japan statement and afterwards captures the decline.
There are no more events scheduled for this week that might impact the currency exchange rate.
Next week, on Tuesday, minor spike in volatility could occur due to the US Durable Goods Orders Release at 13:30 GMT. This event has caused moves on the USD/JPY charts from 5.8 to 11.7 pips since July 2019.
On Wednesday, the US Federal Funds Rate is scheduled to be published at 19:00 GMT. The event has caused moves from 11.2 to 37.2 pips.
Note that the largest moves occurred during rate cuts. This time, no rate cut is expected. Due to that reason a move of around 10 pips can be expected.
On Thursday, the US Advance GDP publication at 13:30 GMT is set to occur. The event has caused moves from 11.1 to 31.2 pips since October 2018.
Next week's event historical data tables have been published. Click on the link below to read the article.
Read More: 27.01-31.01 Event Historical Reactions
USD/JPY short-term daily review
Yesterday, the USD/JPY currency pair declined to the monthly R1 at 109.47. During Friday morning, the pair was testing the upper boundary of the short-term descending channel at 109.65.From a theoretical point of view, it is likely that a reversal south could occur in the short term. In this case the exchange rate could target the weekly S2 at 109.22.
On the other hand, the currency pair could gain support of the monthly R1 and reverse north in the nearest future. In this case it is unlikely that the pair could exceed 110.00 due to resistance formed by the 100– and 200-hour SMAs, as well the weekly PP.
Hourly Chart
On the daily candle chart, the most recent decline has erased some of the overbought pressure that could be seen by observing that the rate had left far below it the daily simple moving averages.
On Friday, the most close by daily simple moving average was the 55-day SMA at 109.16.
Daily chart
Read More: Technical Analysis
Short sentiment does not change
Since Tuesday, 71% of open USD/JPY position volume on the Swiss Foreign Exchange was in short positions.
Meanwhile, in the 100-pip range 81% of pending orders were to sell and 19% were to buy.
Previously, the orders were 78% to sell since Monday.