The US Federal Reserve announced on Thursday another confirmation that most likely an interest rate cut will be done in the near future. This event caused a drop of the USD/JPY, which pierced our descending channel pattern that was capturing the decline of July.
On Friday morning, the currency exchange rate was recovering and aiming to reach back up to the hourly simple moving averages. That way the oversold pressure would disappear.
Economic Calendar Overview at 12:00 GMT
Data releases for this week are over.
Watch the Economic Calendar Overview on Friday at 12:00 GMT to review next week's events.
USD/JPY short-term daily review
During Friday morning London trading hours, the USD/JPY was recovering and heading to a resistance cluster at 107.80. At that level a monthly pivot point and 55 and 100-hour simple moving averages were set to provide technical resistance.In general, it was expected that the currency exchange rate will drop after meeting the resistance levels. This forecast is favoured due to the now expected monetary easing from the Fed. Namely, the information is bound to continue to spread.
On Friday, no observable technical support level was located on the path of a decline. Note that the weekly pivot point that was located at 107.49 will become obsolete next week. Due to these reasons combined, where a decline would stop will be known on Monday.
On the other hand, the recovery of the USD/JPY could reach above the 107.80 level. In that case the rate will test the 200-hour simple moving average, which on Friday was located near 108.20.
Hourly Chart
The daily chart was updated at mid-day on Thursday. In general, the rate is in a large scale descending channel that has guided the pair since late February.
Meanwhile the rate is surging in a smaller scale ascending channel pattern.
Note that in accordance with these patterns the rate is expected to decline down to a support cluster at 107.00. At that level various pivot points, a 23.60% Fibonacci retracement level and the lower trend line of the smaller pattern are located at.
Daily chart
On Friday, 74% of open USD/JPY position volume on the Swiss Foreign Exchange was located in long positions.
These positions were suffering losses throughout the week.
Meanwhile, trader set up pending orders were neutral, as in the 100-pip range 51% of pending orders were set to sell and 49% were to buy.