- The Swiss traders are 69% bullish on the USD/JPY
- Trader pending orders in the 100-pip range are 58% to sell the pair
- The 109.00 level has provided resistance to the rate
On Tuesday the pair bounced off the resistance provided by the 109.00 mark. The event resulted in a decline, which was expected to reach as low as the 108.40 mark.
Latest Fundamental Event
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 key highlight from the official statement, "Fed raises target interest rate to 2.25-2.50 pct, reduces expected hikes for 2019 to two from three."
All attention this week on Canadian rate hike
There are notable macroeconomic and monetary events taking place this week that are scheduled to be covered by Dukascopy and are expected to cause fluctuations in the Forex market.First up on Tuesday the Canadian Trade Balance will be published at 13:30 GMT. The event is expected to cause a bounce from 10 to 35 base points.
Afterwards, Wednesday will be the busiest day of the week for macroeconomics. At 15:00 GMT the Bank of Canada will publish its Overnight Rate. The bank is set to hike their interest rate from 1.75% to 2.00%. Due to that reason the USD/CAD is expected to fall at least 50 base points.
Afterwards, take into account that the big once per week move on oil due to US Crude Oil Inventories is scheduled to occur at 15:30 GMT. During the past month oil prices bounced from 40 to 80 cents per barrel on the announcement.
The busy day will end with the FOMC Meeting Minutes publication at 19:00 GMT. During the event the market usually does not fluctuate. However, surprises are possible.
Last but not least will be the releases on Friday. UK GDP and Manufacturing Production are expected to cause a 20 pip move at 09:30 GMT. At 13:30 GMT the US CPI and Core CPI data sets might cause a 10-30 pip move.
USD/JPY short term daily review
During Tuesday morning hours, the rate was trading at the upper boundary of the medium descending pattern line at the 108.91 mark. Besides, the USD/JPY was supported by the 55-hour and the 100-hour simple moving averages.Most likely, the currency exchange pair will get retraced by the medium pattern line to push the rate to trade at the previously drawn pattern near the 38.20% Fibonacci retracement level at the 108.43 mark.
On the other hand, the rate could break the medium pattern line at the 108.91 mark to trade towards the 50.00 Fibonacci retracement level at the 109.60 mark.
Hourly Chart
Note that on the daily chart the currency exchange rate is far below all of the daily simple moving averages, which are used for technical analysis by Dukascopy Analysis.The fact is signalling that the currency pair has to retrace back upwards after the recent sharp decline, which happened in December.
In addition, since Monday, the rate was located above a strong support level on the daily chart. The pair had no long term resistance as high as the 111.00 level.
Daily chart
Traders of the Swiss Foreign Exchange are mostly long on the USD/JPY. Namely, 69% of trader open positions were long by the middle of Tuesday's trading session.
It can be explained by the fact that after the sharp decline, which has occurred since December, the retail traders are expecting a retracement back upwards.
Meanwhile, trader set up pending orders, stop losses, take profits and position open orders in the 100-pip range were no longer set to buy, as 57% of orders were set to sell on Tuesday.
Most likely these are the take profits and stop loses of the long positions. Although, not all of them, as the long position proportion is much larger than the proportion of the sell orders.