USD/JPY moves between two SMAs

FX:USDJPY   U.S. Dollar / Japanese Yen
USD/JPY moves between two SMAs

In the end of the previous week the currency exchange rate made a breakout from the rising wedge formation. However, because of a decreased liquidity that was caused by Christmas holidays it failed to make a rebound from the lower trend-line of a junior ascending channel . At the moment, it is moving horizontally being squeezed between the 55- and 100-hour SMAs . As there are no important data releases scheduled today, such steady movement is expected to continue. In larger perspective the pair might slip back to the weekly PP because of existence of an alleged resistance zone located near the 113.35 and 113. 40 marks. However, there is a need to take into account that almost 56% of pending orders in 100-pip range are set to buy.
Comment: USD/JPY prepares to test weekly PP

In line with expectations, first half of the previous trading session the currency rate spent in a limbo between the 55- and 100-hour SMAs and then slipped to the weekly PP at 113.10. It appears that this movement confirmed existence of a new minor descending channel. If this assumption is true, then the rate is expected to make another attempt to test the above support barrier. The positive sentiment on the buck points out on a new rebound.

However, the additional pressure from two moving averages might help to push it lower. But even if this scenario materializes, the plunge should not exceed the 113.00 level, as it is secured by the 200-hour SMA and the 50% Fibonacci retracement level.

Comment: The US Dollar extended its losses against the Japanese Yen for the fourth consecutive session. The pair managed to remain near the 100– and 55-hour SMAs on Wednesday.

This rather still momentum sideways was disrupted early in this session when the rate, driven primarily by globally weaker US Dollar and solid fundamentals from Japan, dashed through the combined support of the 200-hour SMA and the 50.0% Fibonacci retracement and thus had reached the monthly PP circa 112.70 a few hours later.

The bearish sentiment might still prevail during the following hours, but the overall direction in this session should be tended northwards. It is expected that the pair retests the 113.00 area; however, it is yet to be seen if the 200-hour SMA is breached.

Comment: The strong momentum south that was driving the US Dollar early on Thursday stopped when the rate reached the 112.70 mark. It subsequently edged higher, but the breached trend-line provided enough resistance to reverse the pair back south.

Converging technical indicators suggest that the Greenback should finally regain some lost positions against the Yen in this session. Thus, the base scenario favours appreciation up to the 113.00 area where the aforementioned trend-line, 50.0% Fibo retracement and the 55– and 200-hour SMAs are located.

Given that this is the last trading session of 2017, it is unlikely that bulls are able to breach this important resistance. Meanwhile, a massive fall is not expected in this session; however, the rate could likewise consolidate near the 112.80 mark.

Comment: Following a 40-pip plunge during the first half of Friday, the pair managed to recover some of its lost positions during the following hours. However, the strong resistance of the 55-hour SMA did not allow surpassing the 112.80 mark, thus leaving the rate lingering slightly above the monthly PP by Tuesday morning.

It is likely that the bullish sentiment prevails in this session which could push the US Dollar up to the weekly PP, the 100-hour SMA and the upper trend line breached on December 28 circa 113.00. Given that this area is likewise reinforced by the 55-day SMA, bulls could fail to overcome this psychological level.

In terms of downward pressure, the US Dollar is supported by the weekly S1 at 112.30.

Comment: The US Dollar started Tuesday’s trading sessions with minor losses, as the pair was pressured southwards by the 55-hour SMA.

Any attempts to breach this line was disrupted by a significant 49-pip plunge later in the session as a result of which the Greenback fell down to the 112.10 mark.

Some positions were re-gained during the following hours, thus leaving the rate slightly below the 55-hour SMA once again.

It is very likely that the 112.50 area, likewise reinforced by the monthly PP, limits further advances during the following hours.

This situation might change later in the session when US fundamentals are to be released. An ultimate daily high could be near the 112.80 mark.