If the support formed by the 100- and 200-hour moving averages hold, it is likely that the USD/JPY currency pair could maintain its consolidation in the short term.
Economic Calendar
This week there are a couple of US data releases on the economic calendars that are shown as high impact.
Today, at 14:00 GMT the US ISM Manufacturing PMI might impact the USD/JPY rate. Since April the announcement has caused moves from 13.9 to 24.3 base points.
On Thursday, the US ADP Non-Farm Employment Change will be published at 12:15 GMT. Although, note that this is one of the releases that should not have a high impact mark and be discussed by financial media, as it has lost its power to impact the financial markets.
Due to that reason, since October 2018 our analysts ignored this data release. Recently, due to the possibility that it might have regained its strength, data was checked.
During this summer, five minutes after the data release there were moves from 5.2 to 15.2 pips on USD/JPY chart.
On Friday, US employment data will be published. The event will have three numbers being revealed – the Average Hourly Earnings, Non-Farm Employment Change and Unemployment Rate.
Due to each of the numbers impacting the rate differently by pushing the value of the USD up or down and with a different strength, the event has a wide range. Namely, since April the USD/JPY has moved from 13.4 to 38.9 pips due to the US labour data.
USD/JPY short-term daily review
During the previous trading session, the USD/JPY currency pair traded sideways in the 106.10/106.40 area. During today's morning, the pair tested the support formed by the 100– and 200-hour SMAs circa 106.15.If the given moving averages hold, it is likely, that the US Dollar could continue to consolidate against the Japanese Yen within the following trading session. If bulls prevail in the market, the exchange rate could target the 106.60 level.
However, if the given moving averages do not hold, it is likely that the rate could trade downwards in the nearest future. Note that the nearest support level—the weekly PP, is located at the 105.82 mark.
Hourly Chart
On the daily candle chart, the pair trades below the daily simple moving averages. It is an indicator of the rate being oversold.
In the meantime, note that during the most recent fundamental drop the rate pierced the lower trend line of a large scale descending channel pattern. The event hints that fundamental event are capable of breaking the pattern.
Daily chart
Read More: Technical Analysis
Volume of long positions decreased
On Tuesday, 63% of USD/JPY open position volume on the Swiss Foreign Exchange was in long positions.
The volume of long positions decreased, as yesterday it was 71%.
Meanwhile, trader set up orders were neutral. Namely, in the 100-pip range 49% of pending orders were set to sell and 51% were to buy.