The USD/JPY has continued to surge. Although, it has gained even more than it was expected, as the ascending pattern on the hourly chart has been broken.
Due to the breaking of the junior and dominant patterns on the hourly chart a full review of the chart has been conducted. Read about that below.
The Bureau of Labor Statistics released US PPI data lower-than-expected of negative 0.2% compared with forecasted 0.01%. Note, that the US Core PPI was released at the same time with the US PPI.
The Bureau of Labor Statistics said in a note, "Lower energy prices sent the producer price index (PPI) down 0.2% in December. Prices for services ticked down 0.1%, but are up 2.8% over the past year—the strongest pace this expansion. The sharp drop in oil prices over the fourth quarter has pulled down energy input costs for a second straight month."
Empty Thursday's session
Besides a couple of speeches by central bankers, which are not expected to reveal anything, there are no notable events scheduled for Thursday.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
Due to the fact that the previous patterns were broken, the chart was fully reviewed to draw freshly new patterns.During Thursday's morning hours, the currency exchange rate was surging towards the weekly R1 which is located at the 109.18 mark. Moreover, the surge is supported by the 55-hour simple moving average.
It is expected that the USD/JPY will reach the 109.00 level during the trading session.
Hourly Chart
On the daily chart the rate has broken free from fluctuating horizontally at the 108.50 level.In general, the pair is on its way to the 200-day SMA at the 111.00 level. In addition, the 200-day SMA was being strengthened by the monthly PP.
Daily chart
On Monday, on the Swiss Foreign Exchange 61% of traders had open long positions of the USD/JPY.
By the middle of Thursday's trading session only 52% of open positions were long. The long sentiment had disappeared slowly throughout the week.
The explanation for the move is simple. Traders have taken profit from the surge.
Meanwhile, trader set up pending orders - stop losses, take profits and position open orders in the 100-pip range had become 53% bullish. Namely, 53% of all orders in that range were set to buy.