As expected, a bounce off from the support of the 38.20% Fibonacci retracement level at 108.44 caused a surge up to the 55 and 100-hour simple moving averages.
In general, the rate is expected to get squeezed in between the SMAs and the retracement level. A squeeze would afterwards result in a break out. A break out can occur either up or down.
Economic Calendar
On Wednesday, at 13:30 GMT the US CPI and Core CPI are scheduled to be published. Since July this event has caused moves from 11.4 to 28.4 pips.
On the same day, the US Federal Reserve would announce its interest rate at 19:00 GMT. The event has created moves from 12.6 to 52.1 pips.
The week is set to end with the US Retail Sales data on Friday at 13:30 GMT. A move from 8.7 to 25.4 pips can be expected.
Meanwhile, the week's scheduled event historical data tables have been published. Click on the link below to read the article.
USD/JPY short-term daily review
Yesterday, the USD/JPY currency pair tested the upper boundary of the short-term descending channel. During Tuesday morning, the pair continued to test the given channel.From a theoretical point of view, it is likely that a reversal south could occur in the nearest future. In this case the exchange rate could gain support of the monthly S1 and the Fibo 38.20% at 108.44.
It is unlikely that bulls could prevail in the market, as the currency pair is pressured by the 55– and 100-hour moving averages, currently located in the 108.65 area.
Hourly Chart
On the daily candle chart, the 38.20% Fibonacci retracement at the 108.43 level was strengthened by the 55-day simple moving average.
In the meantime, the 200-day SMA was pierced by the rate at the 108.90 level.
These factors indicate that the 55-day SMA could push the rate through the resistance of the 200-day SMA. Namely, the daily chart contradicts the hourly chart.
Daily chart
Since Friday, 67% of open USD/JPY position volume on the Swiss Foreign Exchange was in short positions.
By the middle of Tuesday's European trading, 69% of open volume was in shorts.
Meanwhile, trader set up pending orders were to buy. In the 100-pip range 58% of pending orders were to buy and 42% were to sell.
The orders were unchanged since Monday.