USD/JPY Forex Technical Analysis – Buyers Scarce Despite Friday’s Sharp Rise

The Dollar/Yen is edging lower on Monday after failing to follow-through to the upside following Friday’s strong rally. Traders are likely being influenced by the minutes from the Bank of Japan’s December policy meeting. On Friday, the Forex pair rose sharply as the BOJ Governor repeated the central bank will maintain its ultra-loose monetary policy.

At 03:30 GMT, the USD/JPY is trading 129.169, down 0.402 or -0.31%. On Friday, the Invesco CurrencyShares Japanese Yen Trust ETF (FXY) settled at $71.96, down $0.70 or -0.96%.

Early Monday, the BOJ released its policy meeting minutes. At the Dec. 19-20 meeting, the BOJ kept its ultra-easy monetary policy but shocked markets with a surprise change to its yield curve control (YCC) policy that allowed long-term interest rates to rise.

On Friday, BOJ Governor Haruhiko Kuroda, who addressed the World Economic Forum in Davos, Switzerland, said the central bank will maintain its “extremely accommodative” monetary policy to achieve its 2% inflation target in a stable, sustainable manner.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through 127.227 will signal a resumption of the downtrend. A move through 134.775 will change the main trend to up.

The minor trend is up. This is supporting the momentum.

Resistance is lined up at 129.403, 130.050 and 131.001, creating a choppy trade.

Daily Swing Chart Technical Forecast

Trader reaction to the minor pivot at 129.403 is likely to determine the direction of the USD/JPY on Monday.

Bullish Scenario

A sustained move over 129.403 will indicate the presence of buyers. This could lead to a labored rally with potential resistance levels at 129.403, 130.050, 131.001 and 131.578. In order to fuel an acceleration to the upside, the USD/JPY will have to clear the highest level.

Bullish Scenario

A sustained move under 129.403 will signal the presence of sellers. Look for the selling to possibly extend into the main bottom at 127.227, followed by the May 24, 2022 main bottom at 127.227, if this creates enough downside momentum.