Last week, the USD/JPY managed to surge up to the 108.50 level, where it ended the week's trading. On Monday, the rate dropped, as on Sunday the US Federal Reserve had cut interest rates to zero.
By the middle of Monday's trading hours, the pair had reached three support levels near 105.30.
Economic CalendarOn Tuesday, the US Retail Sales could cause a small move in the markets at 14:30 GMT.
On Wednesday, the event of the week is set to occur, as at 20:00 GMT the FOMC Statement and Federal Funds Rate are going to be published.
Meanwhile, Dukascopy Analytics are not publishing the historical reactions this week, as the market environment has changed to such a degree that the historical data is unlikely to be relevant.
USD/JPY short-term daily review
During the previous trading session, the USD/JPY currency pair raised to the Fibo 38.20% at 108.44. During Monday morning, the pair declined to the 106.00 level.Note that the exchange rate faced the support cluster formed by the 55-, 100– and 200-hour SMAs, as well the weekly PP in the 105.50 area. If the given support holds, it is likely that a reversal north could occur.
Otherwise, it is likely that some downside potential could prevail in the market in the nearest future. In this case the currency pair could target weekly S1 at 103.31.
Hourly Chart
On the daily candle chart, the currency exchange rate was recovering, as it retraced back up to the daily simple moving averages. The SMAs provided technical resistance.
Daily chart
Read More: Technical Analysis
Long sentiment decreases
On Friday, 68% of open USD/JPY position volume on the Swiss Foreign Exchange was in long positions.
By the middle of Monday's GMT trading hours, the sentiment was 62% long. Some traders had closed their long positions during the recent decline.