As the US Consumer Price Index was released on Wednesday and revealed a lot larger inflation in the United States than previously expected, the US Dollar surged against the Japanese Yen. During five hours, the currency exchange rate surged by almost 100 base points or 0.90%.
Moreover, the surge slowly continued until it reached the 109.80 level and booked a new May high level. In the meantime, the 109.50 level was providing support to the currency exchange rate.
Economic Calendar
On Friday, the US Retail Sales and Core Retail Sales at 12:30 GMT are bound to move the pair, as the release had moved the pair from 9.3 to 16.7 since December.
Click on the link below to find out more about the data releases of this and other currency exchange rates.
USD/JPY short-term review
In the near term future, the rate could retrace back down by passing the support of the 109.50 mark and the weekly R1 at 109.45. In this case scenario the rate would most likely reach the combined support of the 55, 100 and 200-hour simple moving averages and this week's high level zone just above the 109.00 mark.Meanwhile, a potential surge would have to pass the 109.80 level and the 61.80% Fibonacci retracement level at 109.83 before reaching the 110.00 level.
Hourly Chart
USD/JPY daily chart's review
On the daily candle chart, despite being pierced for three days, it appears that the 55-day simple moving average has provided some support to the recent surge.In addition, note the Fibonacci retracement levels. Namely, the 50.00% Fibonacci retracement at 108.57 and the 61.80% Fibo at 110.05.
Daily chart
On Thursday, traders on the Swiss Foreign Exchange were 68% short on USD/JPY.
During early Wednesday trading, 62% of volume was short.
Meanwhile, trader set up pending orders in the 100-pip range around the rate were 53% to sell the pair.