The USD/JPY broke a weekly S2 simple pivot point on Tuesday morning. Due to that reason the pair had no technical support as low as 106.85, and the rate was expected to decline.
However, the 107.00 exchange rate level could provide support and stop the fall.
Economic CalendarDue to the fundamental changes in the markets, Dukascopy Analytics suggests to note the scheduled macroeconomic events, but avoid using historical data for guidance.
Namely, the whole world changes the money supply by announcing monetary stimulus and government expense increases. In other words, the central banks are creating more money and giving it to governments to stop the effects of the coronavirus. In effect, each announcement causes a fall of the currency that it affects.
During the week, data is bound to reveal, how the coronavirus has continued to impact the US economy.
On Wednesday, the US Retail Sales data sets are bound to be published at 12:30 GMT. Most likely they will surprise the markets with the reveal of a drop in US consumption.
On Thursday, all attention is expected to be set on the weekly US Unemployment Claims. During the last weeks this announcement has been revealing shocking data, as during the two week period almost ten million US workers claimed unemployment benefits. The unemployment claims were previously ignored as they had stopped causing market reactions.
USD/JPY short-term daily review
During the last trading days, the USD/JPY currency pair declined to the support level – the weekly S2 at 107.53. During Tuesday morning, the pair broke the given support.Given that the exchange rate is pressured by the 55-hour SMA near 108.00, it is likely that some downside potential could prevail in the market. Note that the nearest possible support level, formed by the weekly S3 and the Fibo 38.20%, is located only at 106.86.
It is unlikely that bulls could prevail in the market, and the currency pair could exceed the given moving average, as well the weekly S1 at 108.00.
Hourly Chart
On the daily candle chart, there was a quite rare situation. The rate was squeezed in between two daily simple moving averages, which were only 20 pips away one from another. Namely, the 100-day SMA provided resistance, and the 55-day SMA was supporting the rate.
On Monday, the rate broke out of the squeeze to the downside, and the SMAs began to act as resistance.
Daily chart
Read More: Technical Analysis
Traders remain short
On Tuesday, 64% of trader open position volume was bearish.
Previously, on Thursday, 61% of trader open position volume on the Swiss Foreign Exchange was in short positions.
Open position volume was been above 60% short since the start of April.