USD/JPY Forex Technical Analysis – Breakout Over 114.728 Puts 115.501 – 115.615 on the Radar

The Dollar/Yen is inching higher early Wednesday after taking out its highest level in more than five years the previous session. Driving the Forex pair higher are expectations of a sooner-than-expected rate hike by the Federal Reserve to cool an over-heating economy.

On Tuesday, U.S. Treasury yields rose after the release of a stronger-than-expected U.S. retail sales report and hawkish comments from St. Louis Fed President James Bullard. The spread between U.S. government yields and Japanese Government yields widened on the news, making the U.S. Dollar a more attractive asset than the Japanese Yen.

At 07:43 GMT, the USD/JPY is trading 114.862, up 0.028 or +0.02%.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the intraday high at 114.969 will signal a resumption of the uptrend. A move through 113.758 will change the main trend to down.

The nearest resistance is the March 10, 2017 main top at 115.501 and the January 19, 2017 main top at 115.615.

The minor range is 113.758 to 114.969. Its 50% level at 114.364 is potential support.

The second minor range is 112.728 to 114.969. Its retracement zone at 113.849 to 113.584 is another potential support area.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY on Wednesday is likely to be determined by trader reaction to 114.834.

Bullish Scenario

A sustained move over 114.834 will indicate the presence of buyers. Taking out the intraday high at 114.969 will indicate the buying is getting stronger. If this creates enough upside momentum, the USD/JPY could accelerate to the upside with potential targets 115.501 to 115.615.

Bearish Scenario

A sustained move under 114.834 will signal the presence of sellers. Crossing to the weak side of the former top at 114.728 will indicate the selling is getting stronger. This could trigger a break into 114.364.

Since the main trend is up, look for buyers on the first test of 114.364. If this level fails as support then look for a potential acceleration to the downside with the next targets clustered at 113.849, 113.758 and 113.584.