As it was previously forecast, the USD/JPY is getting squeezed in between the support of the 55-hour simple moving average and the resistance of the 200-hour simple moving average.
The levels are closing in one on another. It indicates that the currency exchange rate should break out up or down in the near future.
The Federal Reserve released the FOMC Statement, where the policymakers provided in-depth insights into the economic and financial conditions that influenced their decision to maintain the interest rate unchanged.
According to the Statement, concerns about global economic growth, inflation rate lower than the target level, and tightening financial conditions are the main reasons for pausing on the interest rate hike.
US data next on Friday
On Friday, the US Employment data sets will be published at 12:30 GMT. This event is considered the second most important release for the USD. However, due to three data sets having individual impact on the USD the range of the volatility increase is wide during the data release.Meanwhile, check out the previous data release covers and economic calendar analysis on the Dukascopy Webinars YouTube channel.
USD/JPY short-term daily review
Yesterday, the USD/JPY currency pair tried to surpass the resistance level formed by the 100-hour SMA and the monthly PP at 111.55.From a theoretical point of view, a reversal south should occur in the nearest future, as the pair is trading near the upper boundary of the short-term descending channel at 111.53. A possible downside target is the psychological level at 111.30.
If the given channel does not hold, it is likely, that a breakout north could occur. However, the exchange rate has to surpass the 200-hour SMA, currently located at 111.64.
Hourly Chart
On the daily candle chart, the USD/JPY is bouncing around the 200-day SMA, which is located at 111.48. The rate has to break free from this level to reveal its direction.Meanwhile, the rate has moved below the lower trend line of a dominant ascending channel pattern.
Daily chart
On the Swiss Foreign Exchange, 54% of the total open position volume was in short positions.
On Wednesday, 57% of open position volume was short. The sentiment decreased only slightly during the recent surge.
Meanwhile, trader set up pending orders were bearish, as 55% of pending commands in the 100-pip range were set to sell.