On Tuesday, a sudden surge began on the hourly charts of the USD/JPY. The pair quickly reached the high level of 108.75. During the move previous descending pattern was broken.
Our analyst conducted a review of the hourly chart and spotted two patterns. A dominant channel down pattern and a junior channel up pattern.
The Federal Reserve releases US FOMC Meeting Minutes where fed officials provide in-depth insights into the economic and financial conditions that influenced their vote on where to set interest rates.
The meeting summary stated, "With an increase in the target range at this meeting, the federal funds rate would be at or close to the lower end of the range of estimates of the longer-run neutral interest rate, and participants expressed that recent developments, including the volatility in financial markets and the increased concerns about global growth, made the appropriate extent and timing of future policy firming less clear than earlier."
Busy Brexit week
Fundamental data traders will mostly pay attention this week to the Brexit vote at the UK's Parliament. Meanwhile, macro release traders will still have events to watch and trade.On Tuesday, at 13:30 GMT the US Producers Price Index will be published. The release will be covered mainly due to Dukascopy Analytics sticking to the rule – If it causes 10 pips, we over it.
US PPI causes mostly just above ten pip moves. Enough to trigger a trailing stop loss, but not enough to actually change a strategy.
On the same day note that the ECB President Draghi will testify before the European Parliament in Strasbourg. Some of his comments might cause an increase of volatility in the EUR pairs.
On Wednesday, at 09:15 action will begin in the UK. Namely, at that time the Bank of England Governor Carney will report to the UK treasury about his actions. Most likely he will report how he dealt with Brexit volatility and lay out the bank's future scenario in regards to the results of the Parliament vote on Tuesday.
Simultaneously to the reporting of Carney, the UK CPI will be published. This data release usually causes moves of around 20 base points. However, this time Dukascopy Analytics expect all attention to be taken away by the Carney's report.
Besides a speech at the G20 Meetings by Bank of Japan's Governor Kuroda at 03:20 GMT, there is nothing on Thursday to watch.
On Friday, two data releases will be covered by Dukascopy Analytics.
At 09:30 GMT the UK Retail Sales will be published. Around 10-40 base point move can be expected during the event.
The biggest event of the will occur at 13:30. The Canadian CPI will be published. On the USD/CAD there are 30 pip moves even when it hits the forecast. When the data is different there have been 40-85 pip moves.
USD/JPY short term daily review
During the previous trading session, the currency exchange rate traded sideways to stay near the monthly S1 at 108.17 as it was predicted! On Tuesday morning, the US Dollar appreciated against the Japanese Yen to the 108.57 mark.In regards to the near-term future, most likely, the currency exchange rate will trade upwards to break the resistance of the descending dominant pattern line at 108.70. It is expected that the rate might reach the 108.00 level during the trading session on Tuesday.
On the other hand, the US dollar could depreciate against the Japanese Yen to pass through the support levels of the most technical indicators to trade at 108.20.
Hourly Chart
On Monday, an update to the daily chart is required. As a new week has started, new weekly pivot points have been calculated.In general, it can be seen that the Pivot Points are not providing resistance to the currency pair as high as the 111.00 level.
Meanwhile, take into account that the currency exchange rate is located far below its daily simple moving averages. This indicates that the rate is highly likely going to surge back up to the SMAs.
Daily chart
Since Monday, on the Swiss Foreign Exchange 61% of traders had open long positions of the USD/JPY.
Meanwhile, trader set up pending orders, stop losses, take profits and position open orders in the 100-pip range were neutral no longer neutral on Tuesday. Namely, 58% of trader pending orders were set to sell in that range.
In general, it could be observed that the long position holders have added close by take profits and stop losses.