The USD/JPY faces a strong technical resistance level at 110.70. The near term future revolves around this level.
The most basic assumption is that the pair will bounce off this resistance level and decline.
The Federal Reserve released the US FOMC Meeting Minutes on Wednesday. The Fed officials provided in-depth insights into the economic and financial conditions that influenced their vote on where to set interest rates.
"Almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve's asset holdings later this year. Such an announcement would provide more certainty about the process for completing the normalization of the size of the Federal Reserve's balance sheet," the document said.
Only one US data release
As it is accustomed, the last week of the month is set to be quiet for fundamental macroeconomic data releases.
The macro week will start on Wednesday. At 13:30 GMT the Canadian CPI data will be published.
On Thursday the US Advance GDP will be released at 13:30 GMT. This event can cause moves of around 20 base points.
On Friday, the Canadian GDP data will be out at 13:30 GMT. It is most likely set to be the event which will cause the biggest move during this week.
For more information watch the weekly calendar analysis stream on our youtube channel.
USD/JPY short term daily review
The US Dollar has followed the technical patterns against the Japanese Yen. Namely, the pair has bounced off the upper trend line of a dominant pattern and passed below the support of a junior ascending channel.On Monday the rate was facing a strong resistance level a t the 110.70 level. There three SMAs together with a Fibonacci retracement level and the weekly PP. It is highly unlikely that this level will be broken.
Instead, the pair is more likely set to decline as low as the weekly S1 at the 110.50 mark. Afterwards, the weekly S2 at 110.23 should be targeted.
Hourly Chart
On the daily chart, the pair is seen to be consolidating previous gains by trading sideways. A short term decline would be consistent with the larger scale picture.Daily chart
On Monday, 60% of all the open position volume was in short positions. Traders have been short on the USD/JPY for a rather long time now.
Meanwhile, in the 100-pip range around the pair trader set up pending orders were set to sell the pair in 54% of cases.
Traders continue to be short, as they expect the pair to retrace downwards.