Throughout this week, the USD/JPY has been trading with high volatility. However, it remained almost sideways, as the rate traded between the resistance zone of 109.25/109.35 and support zone of 108.80/108.75.
On Friday morning, the situation had not changed and previous forecasts remained valid.
Economic Calendar
On Wednesday, at 13:45 GMT the US Services and Manufacturing PMIS could cause moves from 3.0 to 28.6 pips. However, note that the 28.6 pip move in November was an anomaly. Without it, the range is 3.0 to 7.6 pips.
On Thursday, the US Final GDP is set to be released at 12:30 GMT. The event has caused moves from 4.5 to 38.9 pips since December 2019. Although, without the March 2020 move of 38.9 pips, the range is insignificant. Namely, 4.5 to 8.5 pips.
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USD/JPY short-term daily review
If the pair eventually passes the resistance of the 109.25/109.35 zone, it would first test the resistance of the weekly R1 at 109.44 and afterwards the 109.80 mark, where the June high level is located together with the weekly R2 simple pivot point.On the other hand, a passing of the 108.80/108.75 support could result in a test of the weekly S1 simple pivot point at 108.51 and the 108.50 level. However, a previous piercing of the support zone did not result in an extended decline.
Hourly Chart
On the daily candle chart, the rate could eventually reach the 61.80% Fibonacci retracement level at the 109.83 level. This retracement level stopped the rate's early June's sharp recovery and forced the USD/JPY into continuing its large scale decline.
Daily chart
On Friday, traders were 73% short on USD/JPY. On Thursday, the sentiment was 71% short.
The Swiss Foreign Exchange open positions have been mostly short for more than three weeks. It appears that traders expect a larger retracement back down.
Meanwhile, trader set up pending orders in the 100-pip range around the rate were 57% to buy.