Given, that the currency pair is supported by the 55-, 100- and 200-hour SMAs, it is likely, that some upside potential could prevail.
Economic calendar
This week, the US FOMC Meeting Minutes are set to be published at 18:00 GMT on Wednesday.
This publication has caused adjustments of the USD/JPY charts since January from 7.7 to 19.4 base points.
USD/JPY short-term daily review
During the previous trading session, the USD/JPY currency pair consolidated at the 106.40 level. During Monday's morning, the pair was testing the resistance of the monthly S2 at 106.54.Note, that the exchange rate is supported by the 55-, 100– and 200-hour SMAs, currently located in the 105.97/106.24 range. Thus, some upside potential could prevail in the market, and the rate could reach the Fibo 23.60% at 107.02.
However, if the given support and resistance hold, it is likely, that the pair could maintain its consolidation in the short term. Also, it is unlikely, that the rate could drop lower than the 105.87 mark due to the support of the monthly S3.
Hourly Chart
On the daily candle chart, it can be observed that the surge of the currency exchange rate was stopped by a 23.60% Fibonacci retracement level at the 106.98 level.
Moreover, it appears that the large scale descending channel last week was only pierced and not broken. Thus, from a theoretical point of view, it is likely, that the rate could go upside in the nearest future.
Daily chart
Read More: Technical Analysis
Traders remain long
On Monday, 75% of USD/JPY open position volume on the Swiss Foreign Exchange was in long positions.
Meanwhile, trader set up orders were strongly bearish. Namely, in the 100-pip range 71% of pending orders were set to sell and 29% were to buy.