The support zone of the 108.75/108.80 level failed, as the USD/JPY clearly passed it on Friday and afterwards began to ignore it.
In the meantime, it was spotted on Monday that the 108.60 level provided the rate with support even as early as Thursday. In addition, a descending trend line was added to the chart. The trend line has kept the rate down since the middle of Thursday's GMT trading hours.
Economic Calendar
On Wednesday, at 13:45 GMT the US Services and Manufacturing PMIS could cause moves from 3.0 to 28.6 pips. However, note that the 28.6 pip move in November was an anomaly. Without it, the range is 3.0 to 7.6 pips.
On Thursday, the US Final GDP is set to be released at 12:30 GMT. The event has caused moves from 4.5 to 38.9 pips since December 2019. Although, without the March 2020 move of 38.9 pips, the range is insignificant. Namely, 4.5 to 8.5 pips.
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USD/JPY short-term daily review
In the near term future, the rate was expected to continue to trade between the support of the 108.60 level and the mentioned resistance line. However, both of these levels could be passed.In the case of the resistance line failing to keep the rate down, the pair could encounter resistance in the 55, 100 and 200-hour simple moving averages and the weekly simple pivot point in the 108.90/109.00 range.
On the other hand, the passing of the support of the 108.60 level and the weekly S1 simple pivot point at 108.58 could result in a decline to the 50.00% Fibonacci retracement level at 108.35.
Hourly Chart
On the daily candle chart, the rate could eventually reach the 61.80% Fibonacci retracement level at the 109.83 level. This retracement level stopped the rate's early June's sharp recovery and forced the USD/JPY into continuing its large scale decline.
Daily chart
On Friday, traders were 73% short on USD/JPY. On Monday, the sentiment was 72% short.
The Swiss Foreign Exchange open positions have been mostly short for more than three weeks. It appears that traders expect a larger retracement back down.
Meanwhile, trader set up pending orders in the 100-pip range around the rate were 62% to buy.