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.
During Tuesday morning, the rate was testing the resistance level – the Fibonacci 23.60% retracement at 107.02.
Economic CalendarToday, 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
Yesterday, the USD/JPY currency pair dropped to the lower boundary of the short-term ascending channel at 105.80. During Tuesday morning, the pair was testing the resistance level—the Fibo 23.60% at 107.02.Note that the exchange rate is supported by the 55-hour SMA near 106.50. Thus, some upside potential could continue to prevail in the market. A possible upside target is the Fibo 38.20% at 108.44.
However, if the given resistance holds, a breakout south from the given channel could occur. In this case the rate would have to surpass the support cluster formed by the 100– and 200-hour SMAs, as well the weekly PP in the 105.15/105.95 area.
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 increases
On Tuesday, 73% of open USD/JPY position volume on the Swiss Foreign Exchange was in long positions.