USD/JPY Forex Technical Analysis – Appears to be Poised to Take Out 109.233 with 109.849 Next Upside Target

The Dollar/Yen is trading higher late Friday, supported by a spike in U.S. Treasury yields. The move widened the spread between U.S. Government bond yields and Japanese Government bond yields, making the U.S. Dollar a more attractive investment.

Some traders said President Joe Biden’s signing of the $1.9 trillion coronavirus-relief package late Thursday drove yields higher because it raised inflation fears.

At 20:27 GMT, the USD/JPY is trading 109.050, up 0.549 or +0.51%.

Don’t expect the Fed to stop the rise in rates either. Chairman Powell already implied that higher rates and higher inflation are acceptable. The Fed will announce its major policy decisions on March 17. The Federal Open Market Committee is expected to leave policy unchanged.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but the rally lost a little upside momentum when a closing price reversal top was formed on March 9.

A trade through 109.233 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a move through 104.923.

The minor trend is also up. A trade through 108.340 will change the minor trend to down. This will shift momentum to the downside.

The USD/JPY is currently trading on the strong side of the main retracement zone at 108.230 to 107.154.

The minor range is 109.233 to 108.340. Its 50% level at 108.787 is intraday support.

The short-term range is 104.923 to 109.233. Its retracement zone at 107.078 to 106.569 is another support zone.

Short-Term Outlook

The direction of the USD/JPY into the close will be determined by trader reaction to 108.787.

Bullish Scenario

A sustained move over 108.787 will indicate the presence of buyers. If this move is able to generate enough upside momentum then look for a possible breakout through 109.233 with 109.849 the next likely upside target.

Bearish Scenario

A failure to hold 108.787 could trigger a break into 108.340, followed closely by 108.230. The latter is a potential trigger point for an acceleration to the downside.

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