USD/JPY signals a surge

Note: This section contains information in English only.
Source: Dukascopy Bank SA

The forecast of the larger scale is proving to be correct. The rate has broken the short term resistance levels, signalling that it will head higher.

Namely, watch the pivot points, round psychological levels, as the rate is set to surge up

Latest Fundamental Event

The Bureau of Labor Statistics released US PPI data lower-than-expected of negative 0.2% compared with forecasted 0.01%. Note, that the US Core PPI was released at the same time with the US PPI.

The Bureau of Labor Statistics said in a note, "Lower energy prices sent the producer price index (PPI) down 0.2% in December. Prices for services ticked down 0.1%, but are up 2.8% over the past year—the strongest pace this expansion. The sharp drop in oil prices over the fourth quarter has pulled down energy input costs for a second straight month."


Empty trading week for USD/JPY

As it is accustomed, the third week of the month is expected to be rather empty for macroeconomic data releases. Although, there are a couple of releases to look forward to this week.

On Wednesday, look forward to the Canadian Retail Sales data release at 13:30 GMT. This event most likely will be the only one notable enough during the rest of the week to be traded by currency release traders.

On Thursday, main attention of fundamental event traders will be on the ECB Rate Announcement at 12:45 GMT. The volatility on the EUR charts usually increases during the ECB Press Conference, which will start at 13:30 GMT.

Meanwhile, oil traders will most likely catch a one percent move at 15:30 GMT. The data release has been providing moves of more than one percent during the last month and a half.
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USD/JPY short term daily review

During the previous trading session, the currency exchange rate broke the previously drawn pattern.

In regards to the near-term future, most likely the currency exchange rate will depreciate towards the 109.45 level. Besides, the 50.00% Fibonacci retracement level will retrace the rate to pass through the 55-hour simple moving average.

On the other side, the US Dollar could be supported by the 100-hour simple moving average to stay at the 109.40 level during the trading session.

Hourly Chart

On the daily chart it can be observed that the pair faces no long term resistance as high as the 110.50 level where the weekly R1 is located at.

Most likely a lone resistance level will be passed and the rate will surge upwards to a strong resistance cluster at 111.00.

The resistance cluster was made up of the monthly PP, weekly R2 and the 200-day simple moving average. Moreover, the 55 and 100-day simple moving averages were approaching from the upper levels to strengthen the 111.00 mark.

Daily chart


Traders are short on USD/JPY

Since Tuesday, traders were short on the USD/JPY. Namely, 54% of open positions on the Swiss Foreign Exchange were short.

Meanwhile, trader set up pending orders - stop losses, take profits and position open orders in the 100-pip range were bullish. 56% of orders in that range were set to buy.

Traders were still short expecting a retracement downwards after the recent slight surge. Meanwhile, the trader set up orders indicated that the retail sector was ready to close their short positions and go long.

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