The Governor of the Bank of Japan stated that the Japanese central bank could execute a smooth exit from the current ultra-easy monetary policy. The statement caused an immediate surge of the value of the Japanese Yen.
The USD/JPY currency exchange rate adjusted to the new fundamental information with an immediate drop down of 45 pips or 0.36%. Afterwards, the decline extended to 63 base points or 0.50%.
Economic Calendar
On Thursday, the US quarterly Preliminary GDP data at 12:30 GMT is set to confirm or deny whether the United States have entered a recession. A recession is defined by two consecutive quarters of decline in the Gross Domestic Product.
Hourly Chart
From a technical analysis perspective, the move passed the support of the 50-hour simple moving average and hit the support of the weekly S1 simple pivot point at 126.60. If the pair passes below the pivot point, the May 24 low level zone at 126.37/126.50 is expected to act as support.
On the other hand, a potential recovery of the US Dollar against the Yen is expected to face resistance in the combination of the 50-hour SMA and the 127.00 level, before reaching the 100-hour SMA near 127.40 and the 127.50/127.60 range.
USD/JPY daily chart's review
On the daily candle chart, the pair has pierced the combined support of the 126.90/127.55 zone and the 50-day simple moving average. The pair could start a broader decline, as the fundamental monetary policy background could change.Daily chart
Since Wednesday, on the Swiss Foreign Exchange, traders were 63% short as that amount of open position volume was in short positions.
Meanwhile, on Wednesday, trader set up pending orders in the 100-pip range around the rate were 58% to sell the USD against the JPY.
On Thursday, the orders were 51% to buy.