The USD/JPY reached the 108.40 level, as it was expected. Although, that level was reached with high volatility.
Namely, the pair retraced back down to the 107.80 level just before reaching the target first time. Afterwards, the rate reached 108.40 in the next six hours.
Institute for Supply Management released the US ISM Non-Manufacturing PMI data, which came out better-than-expected of 56.9 compared with forecast of 55.6.
According to the official release: "he NMI registered 56.9 percent, which is 1.4 percentage points higher than the April reading of 55.5 percent. This represents continued growth in the non-manufacturing sector, at a slightly faster rate."
US employment on Friday will impact USD/JPY
On Wednesday, a minor move might be caused by the ISM Non-Manufacturing PMI at 14:00 GMT.
The week will end with the Canadian and US employment data being published at 12:30 GMT. This event consists of five different data sets being released.
For more details watch the Economic Calendar Overview. Moreover, feel free to ask questions for details.
USD/JPY short-term daily review
During the previous trading session, the USD/JPY currency pair traded sideways around the 55-hour moving average located at 108.17.Note, that the pair is pressured by the 100-hour moving average, currently located at the 108.25 mark. Thus, if the given resistance holds, it is expected, that bears could prevail in the market in the short run. A possible downside target is the weekly S1 at 107.73.
It is expected, that the rate could trade sideways between the given moving averages in the nearest future.
On the other hand, the exchange rate could continue to trade sideways around the given moving averages. Also, it is unlikely, that some upside potential could prevail in the market due to the strong resistance level—the Fibonacci 38.20% retracement at 108.44.
Hourly Chart
On the daily candle chart, a descending channel pattern can be observed. Its lower trend line is strengthening the support of the pivot point at 107.73.Daily chart
Since Tuesday, the Swiss Foreign Exchange sentiment was 73% long. Namely, 73% of open USD/JPY position volume was in long positions.
Meanwhile, trader set up pending orders were also long, as 55% of pending commands in the 100-pip range were set to buy.
In general, it appeared that since Tuesday, despite the USD/JPY touching low levels, traders were long.
On Wednesday, they were profiting from this strategy, and on Thursday, they had not closed the long positions despite the retracement down.