The weekly R1 pivot point eventually failed to provide resistance, as the rate managed to reach the 106.40 mark during Thursday's trading hours. However, the 106.40 held and caused a retracement to the 55-hour SMA.
During the first half of Friday's European trading hours, the 55-hour simple moving average was providing support and pushing the rate back up.
Economic Calendar
On Monday, at 15:00 GMT, expect the US ISM Manufacturing PMI survey results to cause a market reaction on the USD/JPY. Since October, the rate has moved from 5.0 to 13.3 base points.
On Wednesday, the US ADP Non-Farm Employment Change at 13:15 GMT will be on the headlines. However, the market does not care, as since December 2 the rate has moved only 3.9 to 13.3 pips on the release.
On the same day, at 15:00 GMT the US ISM Non-Manufacturing PMI could cause a move from 3.0 to 16.0 pips.
On Friday, at 13:30 GMT the US will publish its monthly employment data. The release will consist of the Average Hourly Earnings, Non-farm Employment Change and Unemployment Rate. The USD/JPY has moved from 10.4 to 25.9 pips on the publication since October.
Click on the link below to find out more about the data releases of this and other currency exchange rates.
USD/JPY short-term daily review
At mid-day on Friday, the USD/JPY currency exchange rate was being kept up by the support of the 55-hour simple moving average. Future scenarios depended on whether the 55-hour SMA continues to provide support.In the case of the 55-hour SMA pushing the rate up, it would once again test the resistance of the 106.40 mark. If this level gets passed, the pair would likely aim at the cluster of resistance levels at 106.85. At that level, a 38.20% Fibonacci retracement level and the weekly R2 simple pivot point are located at.
On the other hand, if the SMA fails to provide support, the rate could look for support in the 100 and 200-hour SMAs near 105.70 and afterwards the weekly simple pivot point at 105.54.
Hourly Chart
On the daily candle chart, the channel up pattern, which captures the 2021 surge, has remained intact. The lower trend line supported the 105.00 mark, from which the rate bounced off on Tuesday.
On Thursday, the rate passed the February high level at 106.25.
Daily chart
On Friday, traders were 75% short on USD/JPY.
On Thursday, on the Swiss Foreign Exchange 72% of open position volume was in short positions.
On Wednesday, the sentiment was 67% short. On Tuesday, it was 61% short.
Trades have been gradually closing long positions and opening short positions. Namely, they take profits from the surge and open short positions in the expectations of a retracement back down.
Meanwhile, trader set up pending orders in the 100-pip range around the rate were 70% to buy.
On Thursday, the orders were just 53% to buy. The new orders were most likely the stop losses at take profits of the short positions.