The USD/JPY rate is skyrocketing. As soon as it broke the resistance of a descending channel on Thursday, a break out occurred, which caused a massive surge.
By the middle of Friday's trading session the rate was about to reach the resistance of the 112.00 level.
The Bureau of Labor Statistics released US CPI data that came better than expected of 0.4% compare with forecasted 0.3%. Note, that the US Core CPI was released at the same time with the US CPI.
The data release caused a minor, but still notable reaction on the USD/JPY charts. Namely, the rate surged by 11 pips before retreating back down.
No more data this week
This week's data releases have ended. Wait for Monday, as on that day Dukascopy Analytics will publish the weekly Economic Calendar Overview. In the video all of the next week's data releases will be reviewed and question can be asked in the comments.Meanwhile, check out previous data release covers and economic calendar analysis on the Dukascopy Webinars YouTube channel.
USD/JPY short term daily review
The rate has fulfilled the second scenario of Thursday's short term analysis. It has broken the resistance of the descending channel and the 55-hour SMA. The event caused a surge, which by the middle of Friday was at 112.00.If the 112.00 level does not hold, the rate would reach for the weekly R1 at 112.17 and afterwards the weekly R2 at 112.48.
Meanwhile, take into account that this surge is out of the ordinary. There is a small probability that it will continue for long. One of the resistance levels could stop this surge by causing an end of the buying.
Hourly Chart
On the daily chart there is a technical reason for the surge. The 100-day simple moving average together with the monthly PP at 110.90 provided the needed support.Initially they stopped the decline of the USD/JPY on Wednesday. On Thursday, the support levels caused a surge.
Meanwhile, the 200-day simple moving average and the weekly PP at 111.47 failed to pause the jump of the currency exchange rate.
Daily chart
On Friday, on the Swiss Foreign Exchange 69% of all open position volume was short.
Traders have been short all week. They were not closing their short position despite the recent jump of the USD/JPY.
Meanwhile, in the 100-pip range around the pair trader set up pending orders were once more bullish. Namely, 54% of orders were set to buy.
Previously, 58% of orders were set to sell on Thursday.