- The Swiss traders are 61% bullish on the USD/JPY
- Trader pending orders in the 100-pip range are 58% to sell the pair
- The 109.00 level continues to provide resistance
On Wednesday, constant attempts to pass the 109.00 level continued and failed. Meanwhile, our analysts spotted that the rate is set to get squeezed in between the mentioned level and a lower trend line of an ascending channel pattern.
Latest Fundamental Event
The Federal Reserve releases US FOMC Meeting Minutes where fed officials provide in-depth insights into the economic and financial conditions that influenced their vote on where to set interest rates.
The key highlight from the official statement, "Fed raises target interest rate to 2.25-2.50 pct, reduces expected hikes for 2019 to two from three."
All attention this week on Canadian rate hike
There are notable macroeconomic and monetary events taking place this week that are scheduled to be covered by Dukascopy and are expected to cause fluctuations in the Forex market.Wednesday will be the busiest day of the week for macroeconomics. At 15:00 GMT the Bank of Canada will publish its Overnight Rate. The bank is set to hike their interest rate from 1.75% to 2.00%. Due to that reason the USD/CAD is expected to fall at least 50 base points.
Afterwards, take into account that the big once per week move on oil due to US Crude Oil Inventories is scheduled to occur at 15:30 GMT. During the past month oil prices bounced from 40 to 80 cents per barrel on the announcement.
The busy day will end with the FOMC Meeting Minutes publication at 19:00 GMT. During the event the market usually does not fluctuate. However, surprises are possible.
Last but not least will be the releases on Friday. UK GDP and Manufacturing Production are expected to cause a 20 pip move at 09:30 GMT. At 13:30 GMT the US CPI and Core CPI data sets might cause a 10-30 pip move.
USD/JPY short term daily review
On Wednesday, the USD/JPY was trading between the 200-hour and the 55-hour simple moving averages at the 108.84 mark. Meanwhile, the 55-hour simple moving average was supporting the rate to remain the rate at the 108.50 level during the previous trading day.It is expected that the US Dollar will depreciate against the Japanese Yen to trade near the 38.20% Fibonacci retracement level at the 108.43 mark.
However, the situation might change during today's US FOMC Meeting Minutes at 19:00 GMT which could push the US Dollar to appreciate against the Japanese Yen to the 109.50 level.
Hourly Chart
Note that on the daily chart the currency exchange rate is far below all of the daily simple moving averages, which are used for technical analysis by Dukascopy Analytics.The fact is signalling that the currency pair has to retrace back upwards after the recent sharp decline, which happened in December.
In addition, since Monday, the rate was located above a strong support level on the daily chart. The pair had no long term resistance as high as the 111.00 level.
Daily chart
Previously, 69% of traders were long on the USD/JPY. On Wednesday, 61% of traders were long. The traders have sold.
After the recent surge most likely short term move traders have taken profits.
Meanwhile, trader set up pending orders, stop losses, take profits and position open orders in the 100-pip range were bearish, as 57% of orders were set to sell since Tuesday.
We still stick to the opinion that most likely these are the take profits and stop loses of the long positions. The previous jump in the long positions was caused by short term speculators.