USD/JPY Forex Technical Analysis – Breakout Over 109.233 Could Trigger Spike into 109.849

The Dollar/Yen closed higher on Friday as a spike in U.S. Treasury yields widened the spread against Japanese Government bond yields, making the U.S. Dollar a more attractive investment. Traders said the surge in yields was in response to President Joe Biden’s signing of the massive $1.9 trillion coronavirus-relief package and a generally optimistic outlook for the economy as the U.S. continues to administer large quantities of COVID-19 vaccines.

On Friday, the USD/JPY settled at 109.034, up 0.533 or +0.49%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is leaning slightly to the downside following the closing price reversal top on March 9.

A trade through 109.233 will negate the closing price reversal top and signal a resumption of the uptrend with 109.849 the next likely target. 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 confirm the shift in momentum.

The minor range is 109.233 to 108.340. The USD/JPY closed on the strong side of its pivot at 108.787.

The main retracement zone is 108.230 to 107.154. This zone is controlling the longer-term direction of the Forex pair.

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

The best support cluster is 107.154 to 107.078.

Short-Term Outlook

Trader reaction to 108.787 is likely to set the tone early Monday. The catalyst behind the direction will be Treasury yields.

Bullish Scenario

A sustained move over 108.787 will indicate the presence of buyers. The first upside target is 109.233. Taking out this level could trigger an acceleration into 109.849.

Bearish Scenario

A sustained move under 108.787 will signal the presence of sellers. This could create the downside momentum needed to challenge 108.340, followed closely by 108.230.

The Fibonacci level at 108.230 is a potential trigger point for an acceleration to the downside.

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