USD/JPY Bulls Eyeing 115.780 for Potential Upside Breakout

The Dollar/Yen is edging higher early Thursday after posting a strong rally the previous session amid a bullish shift in investor sentiment and hawkish chatter from Federal Reserve officials.

On Wednesday, investors trimmed safe-haven positions in the Japanese Yen after the major U.S. stock index futures finished the day higher despite escalating tensions between Russia and Ukraine.

At 05:27 GMT, the USD/JPY is trading 115.660, up 0.144 or +0.13%. On Wednesday, the Invesco CurrencyShares Japanese Yen Trust settled at $81.17, down $0.51 or -0.62%.

The USD/JPY also jumped after Federal Reserve Chairman Jerome Powell said that he remains committed to easing cost pressures through rate hikes, despite the uncertainty unfolding in Ukraine.

The yield on the benchmark U.S. 10-year Treasury advanced Wednesday to about 1.9%, after dipping below 1.7% during the prior session. This helped widen the spread between U.S. Government bond yields and Japanese Government bond yields, making the U.S. Dollar a more attractive investment.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 115.780 will signal a resumption of the uptrend. A move through 114.701 will change the main trend to down.

The first minor range is 116.339 to 114.411. The USD/JPY is trading on the strong side of its pivot at 115.375, making it support. The next minor pivot support comes in at 115.096.

On the downside, the short-term retracement zone support is 114.442 to 113.992. The main retracement zone support comes in at 113.583 to 112.931.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Thursday is likely to be determined by trader reaction to the pivot at 115.375.

Bullish Scenario

A sustained move over 115.375 will indicate the presence of buyers. If this move creates enough upside momentum then look for a surge into the main top at 115.780, followed by the minor top at 115.864.

Taking out 115.864 will indicate the buying is getting stronger with the next major target area 116.339 – 116.345.

Bearish Scenario

A sustained move under 115.375 will signal the presence of sellers. This could trigger a quick break into the second pivot at 115.096. A failure to hold this level will likely lead to a test of the main bottom at 114.701, followed by the next main bottom at 114.411.

Another potential downside target is the support zone at 114.442 to 113.992.